Vanguard Growth Index Fund
From Bogleheads
| Company: | Vanguard |
|---|---|
| Fund category: | US Large Growth Stocks |
| Benchmark: | MSCI U.S. Prime Market Growth Index |
| Start date: | 11/02/1992 |
| Expense ratio: | 0.22% |
Vanguard Growth Index Fund presently tracks MSCI US Prime Market Growth Index. According to the fund's PROSPECTUS,
The Fund employs a "passive management"--or indexing--investment approach designed to track the performance of the MSCI US Large Cap Growth Index, a broadly diversified index of growth stocks of large U.S. companies. The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index.
The Fund Holdings page on the Vanguard website reports that as of 11/30/2008, the fund invests in 407 stocks, while the benchmark index includes 405.
Contents |
Share Classes
Three share classes are available to individual investors:
- Investor (VIGRX), with an expense ratio (ER) of 0.22% and an initial minimum investment of $3,000.
- Admiral (VIGAX), with an ER of 0.10% and a minimum investment of $100,000, except $50,000 suffices for conversion of an Investor Shares account in existence 10 years.
- ETF (VUG), with an ER of 0.10% and no minimums, though transaction costs apply in buying and selling through a brokerage.
Total costs of the ETF and open-end classes may be compared via this Vanguard calculator.
Two additional share classes are offered through some workplace retirement plans:
Advantages
Low expenses
The Vanguard Growth Index Fund offers very low-cost access to large US growth stocks.The fund expense ratio and the average Large Growth Fund expense ratio are given in the table below:
| Share Class | Expense Ratio | Average Fund ER |
| Investor Shares | 0.22% | 1.43% |
| Admiral Shares | 0.10% | 1.43% |
| ETF Shares [1] | 0.10% | 0.19% |
| Signal Shares | 0.10% | 1.43% |
| Institutional Shares | 0.07% | 1.43% |
[1] iShares S&P 500 Growth (0.18%) and iShares Russell 1000 Growth (0.20%)
The fund paid $522,000 in brokerage commissions in fiscal year 2007, which produces a Commission Ratio (CR) of 0.004%.
Criticisms
Performance
This historical returns webpage provides VIGRX performance for each of the 16 full calendar years the fund has been in existence. During this 1993-2008 period, the fund had an average annualized return of 5.97%. This compares to the 6.08% return realized by the benchmark index. The fund's best calendar year result was +42.21% (1998), and its worst was -38.32% (2008). Its tracking error relative to its benchmark has varied from -0.24% (1994) to +0.51% (1999).
Vanguard Institutional reports updated three year standard deviations of monthly returns. This measure of return volatility shows the fund had a 16.45% standard deviation compared to the 16.45% standard deviation of the benchmark as of 11/31/08.
Tax Efficiency
VIGRX has provided efficient after tax returns to investors. Over its fifteen year lifespan it has distributed an average 1.10% dividend (all 100% qualified dividends since this lower tax regime has been in place) and an average 0.33% capital gains distribution (centered on a four year span in the latter years of the long nineties bull market.) A complete table of fund distributions is available at Vanguard Growth Index Fund Taxable Distributions. The effects of ETF creation/redemption activity on the fund's tax attributes can be accessed in Vanguard Growth Index Fund Tax Attributes 2004-2007.
History
Inception dates of the various share classes are as follows:
- Investor: 11/02/1992
- Institutional: 05/14/1998
- Admiral: 11/13/2000
- ETF: 01/26/2004
- Signal: 06/04/2007
The fund's fiscal year ends on 12/31 of each year.
The fund made a minor change of benchmark on 05/16/2003, moving from the S&P 500/Barra Growth Index to the MSCI US Prime Market Growth Index.
Links
- Morningstar Fund Page
- Vanguard Index Fund Tax Attributes FY-2007 (monograph by Barry Barnitz) contains tax data on the fund
- Vanguard Growth Index Fund accounting data
