Sunday, August 26, 2007

Vanguard's U.S. Index Funds

Vanguard is the market leader in providing index funds to retail investors. Understanding what their offerings really track is important when constructing a portfolio. Here is my summary of their U.S. index funds. Perhaps the biggest surprise is that the mid-cap index fund is actually a subset of the large-cap index fund! Also I truly wish Vanguard could offer a micro-cap index fund like DFA (Dimensional Fund Advisors) does.

500 Index Fund (VFINX)
Index: S&P 500 Index
Constituents: 500 largest companies
% of total market cap: 75%

Extended Market Index Fund (VEXMX)
Index: S&P Completion Index
Constituents: total market - 500 largest companies
% of total market cap: 25%

Large-Cap Index Fund (VLACX)
Index: MSCI US Prime Market 750 Index (MSCI US Large Cap 300 Index + Mid Cap 450 Index)
Constituents: 750 large and medium-size companies
% of total market cap: 86%

Value/Growth Index Fund (VIVAX/VIGRX)
Index: MSCI US Prime Market Value/Growth Index
Constituents: value/growth half of the 750 large and medium-size companies

Mid-Cap Index Fund (VIMSX)
Index: MSCI US Mid Cap 450 Index
Constituents: 450 medium-size companies
% of total market cap: 15%

Mid-Cap Value/Growth Index Fund (VMVIX/VMGIX)
Index: MSCI US Mid Cap Value/Growth Index
Constituents: value/growth half of the 450 medium-size companies

Small-Cap Index Fund (NAESX)
Index: MSCI US Small Cap 1750 Index
Constituents: 1750 small companies (total market - 750 large and medium-size companies - micro-cap companies)
% of total market cap: 12%

Small-Cap Value/Growth Index Fund (VISVX/VISGX)
Index: MSCI US Small Cap Value/Growth Index
Constituents: value/growth half of 1750 small companies

Total Stock Market Index Fund (VTSMX)
Index: MSCI US Broad Market Index (MSCI US Large Cap 300 Index + Mid Cap 450 Index + Small Cap 1750 Index + Macro Cap Index)
Constituents: 3000+ companies
% of total market cap: 99.5%

References:
https://flagship.vanguard.com/VGApp/hnw/FundsByType
http://www.msci.com/us/indexperf/definitions.html

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