Vanguard Tax-Managed Small-Cap Fund
From Bogleheads
| Please help improve this article by expanding it. Please improve this article if you can, or talk about solutions on the discussion page. |
| Company: | Vanguard |
|---|---|
| Fund category: | US Small Cap Stocks |
| Benchmark: | S&P Small Cap 600 Index |
| Start date: | 03/25/1999 |
| Expense ratio: | 0.13% |
Vanguard Tax-Managed Small-Cap Fund is designed for investors holding US small cap stocks in taxable accounts. The fund is benchmarked to the S&P 600 Index. According to the fund's PROSPECTUS,
The Fund purchases stocks included in the Standard & Poor's Small Cap 600 Index--an index that is made up of stocks of smaller U.S. companies--in approximately the same proportions as in the Index. To improve tax efficiency, the Fund may limit investments in Index securities that have undesirable tax characteristics, and may continue to hold securities no longer included in the Index.
The Fund Holdings page on the Vanguard website reports that as of 10/31/2008, the fund invests in 602 stocks, while the benchmark index includes 600.
Contents |
Share Classes
One share class is available to individual investors:
- Investor (VTMSX), with an expense ratio (ER) of 0.13% and an initial minimum investment of $10,000, and a 1% redemption fee on shares sold within five years of purchase.
An additional share class is offered to institutional investors:
- Institutional (VTSIX) with an ER of 0.09%, an initial minimum investment of $5,000,000, and a 1% redemption fee on shares sold within five years of purchase.
Advantages
Low Expenses
The Vanguard Tax-Managed Small Cap Fund has very low expense ratios:
| Share Class | Expense Ratio | Average Fund ER |
| Investor Shares | 0.13% | 1.50% |
| Institutional Shares | 0.09% | 1.50% |
The Tax-Managed Small Cap Fund paid brokerage commissions of $759,000 in FY 2007, for a Commission Ratio (CR) of 0.038%.
Tax efficiency
As a tax-managed fund, Vanguard Tax-Managed Small Cap Fund has kept faith with its mandate by never distributing a taxable gain in its history, and, since the enactment of the provision in the tax code creating tax-preferenced qualified dividends, providing 100% qualified dividends to it shareholders. For a complete history of the fund's taxable distributions refer to Vanguard Tax-Managed Small Cap Fund Tax Distributions.
Criticisms
Tax Loss Harvesting
The five year 1% redemption fee adds a potentially substantive cost if one wishes to harvest a loss.
Performance
This historical returns webpage provides VTMSX performance for each of the 8 full calendar years the fund has been in existence. During this 2000-2007 period, the fund had an average annualized return of 10.06%. Its best calendar year result was +38.51% (2003), and its worst was -14.44% (2002). Its tracking error relative to its benchmark varied from -1.10% (2001) to +1.64% (2000).
History
Inception dates of the various share classes are as follows:
- Investor: 03/25/1999
- Institutional: 04/21/1999
The fund's fiscal year ends on 12/31 of each year.
Links
- Morningstar fund page
- Vanguard Tax-Managed Funds Tax Attributes-FY 2007 (monograph by Barry Barnitz) contains tax data on the fund.
- Vanguard Tax-Managed Small-Cap Fund accounting data
