Evaluation and Comparison of Funds

Instructions: For your research, you will use www.morningstar.com (search for fund symbol)
Both options seek growth through exposure in the U.S. Stock Market. In your analysis you will decide which
option is best for the stock portion of your investment portfolio. Assume you have $3,000 to invest.
60 points total
5 pts
Fund Name Vanguard Explorer Fund Bridgeway Small-Cap Value
Fund
Fund Symbol VEXPX BRSVX
Total Assets of the Fund 23 Bil 207.1 Mil
(Quote tab)
Minimum Initial Investment 3,000.00 2,000.00
(Quote tab)
Load (Price tab) No Load. No Load.
Return VS. Risk (Risk tab, look Risk vs. Category: Average Risk vs. Category: Average
at 3-year) Return vs. Category: Average Return vs. Category: High
Fund Expenses 10 pts
Expense Ratio % (Quote tab) 0.410% 0.940%

Analysis point: $3,000 at 0.410% is $12.30 $3,000 at 0.940% is $28.20

For each fund, on a $3,000
investment, how much of your
money will go to expenses each
year? (show the math)
Explain the risk vs. category and VEXPX has an average variation of BRXVX has an average variation of
the return vs. category ratings monthly returns from similar funds monthly returns from similar funds
for each fund in one complete and an average of excess return over and a high excess over risk-free rate
sentence in your own words. a risk-free rate, again compared to as compared to similar funds.
similar funds.
Diversification (Portfolio tab > Asset Allocation) 10 pts
The asset allocation chart shows
you the percent of fund money % US Stock % US Stock
invested in different types of 94.86% of the fund is in US Equity 98.80% of the fund is in US Equity
securities. How much is
invested in U.S. equity?
How many different Equity
Holdings does the fund include? # equity (stock) holdings # equity (stock) holdings
(Portfolio tab, then scroll down 702 115
to Holdings)
List the fund’s five largest Company Name % Company Name %
holdings and its portfolio 1. Five9 Inc 0.97 1. GameStop Corp Class A 1.96
weight: 2. Burlington Stores Inc 0.97 2. Antero Resources Group 1.91
3. Insulet Corp 0.89 3. MISTRAS Group Inc 1.68
4. Icon PLC 0.77 4. Primoris Services Corp 1.64
5. Etsy Inc 0.75 5. CONSOL Energy Inc 1.62
Ordinary Shares
Annual Turnover rate 43% 87%
What does turnover mean?
Which fund has the most The turnover rate is a measure of how much of a funds “Inventory” or
desirable turnover? Be detailed “Assets” that it holds is turned over or sold and purchased in a given time
in your answer. 4 pts period. In this case, VEXPX only sold and purchased stock in companies
equal to 43% of its holdings versus BRSVX which sold and purchased
amounts equivalent to 87% of its holdings. Lower turnover ratios are
 indicative of passively managed funds and also indicate that less sales and
purchases are being made in the holdings. This equates to less management
fees and less capital gains and the resulting tax implications being passed
down the line to the individual investor. BRSVX is actively selling and
buying to create get the high Return vs. Category numbers but as such they are
generating costs that are reflected in their much higher expense ratio. Also of
note is the fact that their holdings of 115 different equity stocks lacks the
diversity of VEXPX’s 702, therefore leaving them to work even harder to
garner returns from a smaller pool.

Fund Symbol VEXPX BRSVX

Fund Management (People tab)
Date of fund inception
How many managers run the
fund? List their names.
3 pts
Dec 11, 1967 Oct 31, 2003
Eleven managers and they are James Three managers and they are John
P. Stetler, Ryan Edward Crane, N.R. Montgomery, Elena Khoziaeva,
Daniel J. Fitzpatrick, Chad Meade, and Michael Whipple.
Brian A. Schaub, Binbin Guo, Brian
M. Angerame, Aram E. Green,
Jeffrey J. Russell, Matthew Lilling,
and Cesar Orosco

Which fund has the longest Longest serving manager started in BRSVX has the longest serving
serving managers? February of 2012. Just over 9 years.manager starting in October of 2003.
Just shy of 18 years.
Fund Performance (On Morningstar.com click on the performance tab, scroll down to trailing returns. Look
at the total return % for the fund for each time frame, the numbers are percentages) 12 pts
Fund performance over last 3 21.83% 16.86%
years
Fund performance over last 5 21.26% 16.53%
years
Fund performance over last 10 14.18% 11.66%
years
Fund performance over last 15 10.61% 7.15%
years
Analysis point: Which fund has
the better performance over the VEXPX consistently has the better performance over the range above. What is
past 3, 5, 10 & 15 years? also key is that the numbers above adjusted for expense ratio, show an even
(Note: each percentage is an greater rate of return for VEXPX.
average per year over the given
number of years)

Note: Morningstar Performance figures, expressed in percentage terms, are determined by taking the change in price,
reinvesting, if applicable, all income and capital gains distributions during the period, and dividing by the starting price.
Unless otherwise noted, Morningstar does not adjust total returns for sales charges (such as front-end loads, deferred loads,
and redemption fees), preferring to give a clearer picture of performance. Total returns do account for the expense ratio,
which includes management, administrative, 12b-1 fees, and other costs that are taken out of assets. Three, five, ten, and
15-year returns are annualized. BE SURE TO READ THIS
Net Asset Value (Quote tab) 8 pts
Net Asset Value $145.64 $34.38

TTM (trailing twelve month) Yield 0.11% 0.60%

Analysis point: Explain what The TTM Yield refers to the percentage of income the portfolio has returned to
this 12-month yield means. investors.
Based on the above information, explain which of these two funds would best help you achieve your
investment goals? Explain your answer IN DETAIL here using at least four pieces of information from
above to justify your answer. Please number your answers 1, 2, 3, and 4. You should have a short paragraph for
each of the four, explaining why each piece of information is important for your decision. 12 pts

VEXPX is my choice for the following reasons:

1. The inception of this fund was in 1967 and it has asset holdings in of 23 Billion dollars. This
demonstrates maturity and the size of its holdings tells me that it is a trusted fund and has many
investors.
2. Vanguard in general has some of the lowest if not the lowest expense ratios and this coupled with
the number of people on their management team means that it has more eyes on its holdings at a
cheaper cost to me.
3. It has also shown consistently higher returns as evident to the TTM Yield, again with an
adjustment of expense ratio it becomes and even better performer.
4. Lastly, it has 702 companies in its holdings which shows great diversity and gives me a feeling of
safety as the market rises and falls along with the fact that it has a lower turnover ratio. These
two points in the end give me better returns at an average risk that is spread over a greater portion
of the market.

Hint: Do not use NAV as a reason to buy or not buy a fund.