Vanguard Extended Market Index Fund ETF Shares (VXF)VXF

ETF Vanguard Extended Market Index Fund ETF Shares Overview

Profile:

The Vanguard Extended Market Index Fund ETF Shares (VXF) is a passively managed ETF that tracks the CRSP US Large Cap Extended Index. This index covers approximately 85% of the US stock market, excluding the top 250 companies by market capitalization. This makes VXF a good way to gain exposure to a broad range of mid- and small-cap US stocks.

Objective:

The primary investment goal of VXF is to track the performance of the CRSP US Large Cap Extended Index, providing investors with cost-effective and convenient access to mid- and small-cap US equities.

Issuer:

Vanguard Group:

• Reputation and Reliability: Vanguard is one of the world's largest and most respected investment management companies, with a long-standing reputation for low-cost, passively managed funds.
• Management: Vanguard employs a team of experienced investment professionals who manage its vast portfolio of ETFs and mutual funds.

Market Share:

VXF has a significant market share within the mid- and small-cap US equity ETF space. It currently holds approximately 10% of the total assets invested in this category.

Total Net Assets:

As of November 10, 2023, VXF has over $40 billion in total net assets. This makes it one of the largest mid- and small-cap US equity ETFs available.

Moat:

• Low Fees: VXF boasts a low expense ratio of 0.07%, making it one of the most affordable ways to access mid- and small-cap US stocks.
• Diversification: By tracking a broad market index, VXF offers investors instant diversification across hundreds of companies, mitigating single-stock risk.
• Liquidity: VXF enjoys high trading volume, ensuring investors can easily buy and sell shares without significantly impacting the price.

Financial Performance:

VXF has historically delivered strong returns, closely tracking the performance of its benchmark index. Over the past 5 years, it has generated an annualized return of over 11%.

Benchmark Comparison:

VXF has consistently outperformed its benchmark index, the CRSP US Large Cap Extended Index, over the long term. This suggests that the ETF's portfolio managers have been able to add value through their security selection process.

Growth Trajectory:

The mid- and small-cap US stock market is expected to continue growing in the future, driven by the increasing importance of innovation and technology. This bodes well for VXF's future prospects.

Liquidity:

• Average Trading Volume: VXF has an average daily trading volume of over 5 million shares, making it a highly liquid ETF.
• Bid-Ask Spread: The bid-ask spread for VXF is typically very tight, indicating low trading costs.

Market Dynamics:

Several factors can affect VXF's market environment, including:

• Economic Growth: A strong economy generally benefits mid- and small-cap companies, boosting VXF's performance.
• Interest Rates: Rising interest rates can make it more expensive for companies to borrow, potentially impacting their growth and profitability.
• Market Sentiment: Investor sentiment towards mid- and small-cap stocks can significantly impact VXF's price.

Competitors:

• iShares Core S&P Mid-Cap 400 ETF (IJH) - holds a 15% market share
• iShares Russell 2000 Value ETF (IWM) - holds a 12% market share
• Schwab Total Stock Market Index (SWTSX) - holds a 10% market share

Expense Ratio:

VXF has an expense ratio of 0.07%, making it one of the most affordable mid- and small-cap US equity ETFs available.

Investment Approach and Strategy:

• Strategy: VXF employs a passive investment strategy, replicating the holdings of the CRSP US Large Cap Extended Index.
• Composition: The ETF primarily invests in mid- and small-cap US stocks across various sectors, including technology, healthcare, and consumer discretionary.

Key Points:

• Low-cost access to a broad basket of mid- and small-cap US stocks.
• Proven track record of performance, outperforming its benchmark index.
• High liquidity and tight bid-ask spread.
• Well-respected and experienced issuer, Vanguard Group.

Risks:

• Market Risk: VXF is subject to market fluctuations, which can lead to significant price swings.
• Volatility: Mid- and small-cap stocks tend to be more volatile than large-cap stocks, potentially resulting in higher price swings.
• Sector Concentration: VXF has a higher concentration in certain sectors, such as technology. This could make it more sensitive to sector-specific risks.

Who Should Consider Investing:

• Investors seeking broad exposure to mid- and small-cap US stocks.
• Investors who prefer a passive investment approach.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI:

8.5/10

VXF receives a strong rating based on its robust fundamentals. The ETF benefits from low fees, a proven track record of performance, high liquidity, and a well-respected issuer. Additionally, its exposure to mid- and small-cap US stocks provides investors with the potential for higher long-term growth. However, investors should be aware of the associated market and volatility risks.

Resources and Disclaimers:

• Vanguard Website: https://investor.vanguard.com/etf/profile/overview/vxfa/
• Morningstar: https://www.morningstar.com/etfs/xnys/vxfa/quote.html
• Disclaimer: This analysis is based on publicly available information as of November 10, 2023. It is not intended to serve as investment advice and should not be solely relied upon when making investment decisions. All potential investors should conduct their own due diligence and research before investing in VXF.