VIVAX - Vanguard Value Index Inv

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Vanguard Value Index Inv (VIVAX)
Expense Ratio: 0.24%
Expected Lifetime Fees: $7,737.49

The Vanguard Value Index Inv fund (VIVAX) is a Large Value fund started on 11/2/1992 and has $15.80 billion in assets under management. The current manager has been running Vanguard Value Index Inv since 01/21/1995. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard Value ETF (VTV)
Expense Ratio: 0.10%
Expected Lifetime Fees: $3,271.86

The Vanguard Value ETF (VTV) is an Exchange Traded Fund. It is a "basket" of securities that index the Large Value investment strategy and is an alternative to a Large Value mutual fund. Fees are very low compared to a comparable mutual fund like Vanguard Value Index Inv because computers automatically manage the stocks.

The Following Large Value Funds Have Lower Fees Than Vanguard Value Index Inv (VIVAX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
DFA Tax-Managed US Marketwide Value II DFMVX 20.0% 849 0.23%
DFA US Large Cap Value III DFUVX 14.0% 1,900 0.14%
TIAA-CREF Large-Cap Value Idx Inst TILVX 27.0% 893 0.08%
Vanguard Equity-Income Adm VEIRX 29.0% 7,900 0.22%
Vanguard Mega Cap 300 Value Index Instl VMVLX 24.0% 477 0.10%
Vanguard Russell 1000 Value Index Fund Institutional Shares VRVIX 39.0% 388 0.09%
Vanguard Value Index Instl VIVIX 23.0% 15,800 0.08%
Vanguard Value Index Signal VVISX 23.0% 15,800 0.10%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.