Morningstar recently said that this 5-star-rated midcap value fund is one of the ‘lowest-cost actively-managed options’ in this category, with an expense ratio of 0.44%.
Vanguard Selected Value (VASVX)
From The Complete Investor
I f you’re a bargain hunter, you probably would like Vanguard Selected Value (VASVX). This mid-value FundFolio pick ferrets out undervalued stocks, looking for companies that have turnaround potential, pay a high dividend, and/or are underperforming relative to their earnings growth prospects. As suggested by the relatively low 24 percent turnover, the fund invests for the long haul. All these strategies have resulted in an average P/E of 13.6 for the fund’s holdings, below the market’s and below average for the category.
Of course, with value stocks, as we’ve noted before, you always run the risk that maybe the market has gotten it right in its negative assessment and the stocks will remain beaten down. The Vanguard fund’s strong research arm helps keep this risk to a minimum. When we last discussed the fund, it was being managed by two teams of subadvisors: Barrow, Hanley, Mewhinney & Strauss and Donald Smith & Co., which collaborated to produce the fund’s great long-term record. In the past year the fund has added a third team of managers to this already impressive roster, the deep-value specialist Pzena Investment Management. We think this bodes well for future results.
Vanguard Selected Value fund has been a strong performer over the years. It ranks in the top 16th, 19th, 17th, 22nd, and 36th percentile of its peers for the past 15-, 10-, 5-, 3- and 1-year periods, respectively, and it now has some $9.7 billion under management. An added attraction is that as a member of the Vanguard family of funds, expenses are ultra-low at 0.44%.
Compared to many other Vanguard funds, Vanguard Selected Value is relatively concentrated. At last count it had 122 total holdings, with the top 10 positions accounting for around one-fourth of total assets. Its five largest holdings are: Royal Caribbean Cruises, Hanesbrands, Stanley Black & Decker, Owens Corning, and Reynolds American. Some 82% of its assets are invested in U.S. stocks, 9% are in foreign equities, and 9% is in cash. Compared to its benchmark and to its peers, the Vanguard fund is significantly overweighted in consumer discretionary and industrials and significantly underweighted in energy, technology, and utilities.
Stephen Leeb, PhD. and Genia Turanova, The Complete Investor, www.completeinvestor.com, 866-833-2070, February 2016