Vanguard Tax-Managed Small Cap is a great small-cap stock fund. Its low fee, broad diversification, and effective tax management should translate into strong category-relative performance. But small-cap stocks are less liquid than large caps, so forced trades can add costs to index-tracking strategies. While the fund takes prudent steps to mitigate these costs, it warrants a downgrade to a Morningstar Analyst Rating of Silver from Gold.
Will VTMSX outperform in future?
Get our overall rating based on a fundamental assessment of the pillars below.
The Process Pillar is our assessment of how sensible, clearly defined, and repeatable VTMSX’s performance objective and investment process is for both security selection and portfolio construction.
The People Pillar is our evaluation of the VTMSX management team’s experience and ability. We find that high-quality management teams deliver superior performance relative to their benchmarks and/or peers.
The Parent Pillar is our rating of VTMSX’s parent organization’s priorities and whether they’re in line with investors’ interests.