Vanguard Value Index Fund Admiral Shares VVIAX

Vanguard Value ETF has a reasonably priced portfolio of large-cap US stocks trading at attractive valuations.

The fund tracks the CRSP US Large Cap Value Index, derived from the broader CRSP US Large Cap Index, which represents approximately 85% of the US stock market by capitalization. CRSP assigns each stock a composite style score using growth- and value-oriented metrics including dividend/price, sales/price, and book/price. The index uses this composite score to place stocks into a value or growth sleeve with minimal overlap between the two, reinforcing the intention of each style. This differs from peers, many of whom allow some stocks to exist in both value and growth indexes.

Market-cap weighting is well-suited to the large-value universe. Large-cap stocks tend to reflect new information quickly, reducing the likelihood that active managers can consistently generate excess returns. This approach also helps contain trading costs by minimizing changes during rebalancing. While the index may hold companies facing fundamental pressure or limited growth prospects, market-cap weighting naturally mitigates this risk by reducing exposure as share prices fall.

The fund’s overall profile closely mirrors that of the large value peer group. Sector exposures typically stay within 5 percentage points of Morningstar Category averages, and as of February 2026, communication services was the only sector deviating by more than 3 percentage points. Valuation measures, including price/earnings and price/book, have consistently aligned with category norms.

The fund remains fully invested, which can exacerbate drawdowns during broad market sell-offs. Still, it effectively captures the large-value opportunity set. Over the 10 years through February 2026, it outpaced the category average by 1.34 percentage points annualized with a superior risk-adjusted return.

Morningstar acquired the Center for Research in Security Prices, the provider of the index tracked by this fund, in February 2026. Morningstar analysts work independently from the index business, and the Morningstar Medalist Ratings for funds tracking CRSP indexes are based solely on the fund's investment merits. Analysts do not provide qualitative ratings or opinions for investments managed by Morningstar or managed investments that track Morningstar indexes that incorporate discretionary inputs assigned by Morningstar employees on an ongoing basis, such as Morningstar Economic Moat Ratings or ESG Risk Ratings.

The strategy effectively captures the US large-value market, earning it an Above Average Process Pillar rating.

The fund tracks the CRSP US Large Cap Value Index. It stems from the broader CRSP US Large Cap Index that roughly covers the largest 85% of the US stock market by capitalization. CRSP assigns each stock a composite style score based on factors like dividend/price, sales/price, and book/price. Stocks land in either the value or growth sleeve depending on that score. The index has another benefit that limits unnecessary trading. It splits trades over two rebalancing periods when a stock migrates from one segment to another, so it won’t fully buy or sell a position until a stock consistently exhibits a change in its style orientation.

The index reconstitutes quarterly and employs buffer rules designed to curb unnecessary turnover. It spreads its rebalancing trades across five days to help control costs associated with large transactions. Turnover has averaged just 8% annually over the past five years.

Market-cap weighting fits well within the large-value universe. Large-cap stocks tend to incorporate new information quickly, limiting the opportunity for active managers to consistently add value. The approach also keeps trading costs low by minimizing the amount of change during rebalancing. While the index can include companies with weakening fundamentals or muted growth prospects, market-cap weighting naturally reins in that risk, as declining share prices reduce such stocks’ influence on the portfolio.

The fund’s characteristics closely resemble the large-value category average. Sector weightings typically remain within 5 percentage points of peers, and communication services was the only sector that strayed by more than 3 percentage points as of February 2026. Valuation metrics also line up with the category norm. Measures such as price/earnings and price/book have consistently mirrored those of competing strategies.

The portfolio is less diversified than the average peer, holding roughly 340 stocks over the past five years compared with about 500 for the category. Despite having fewer holdings, the portfolio allocates just 21% of assets to its top 10 holdings, versus nearly 30% for the average peer. Large, steady earners such as J.P. Morgan Chase and Johnson & Johnson have been among these top holdings for over a decade.

The fund remains fully invested, which may amplify losses during broad market selloffs relative to peers that maintain cash buffers. Still, it captures the large-value opportunity set well and has done so for more than a decade.

Vanguard's equity index group earns an Above Average People Pillar for its well-supported and stable management team adept at leveraging Vanguard's comprehensive resources. Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk-management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure the management team's interests are closely tied to those of investors.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

The fund outperformed the US large-value category average by 1.34 percentage points annualized over the 10 years through February 2026. It returned 13.12% annualized over that time. Volatility was similar to the category average, but its risk-adjusted return still came out ahead.

The fund’s focus on the largest 85% of the US market drives performance that differs from the category average. Gains among large-cap stocks have fueled much of its outperformance in recent years. Leaning heavily into the largest healthcare and financials stocks paid off, but that tailwind won’t always persist. A strict size mandate can leave the portfolio vulnerable when smaller stocks lead the market, and peers that venture further down the market-cap spectrum are better positioned to benefit from a mid- or small-cap rally.

By concentrating on the largest value-oriented stocks, the fund offers investors a more predictable return profile and should shine when the value style gains favor. Avoiding growth-leaning names that other value-focused peers include helps damp volatility and reinforces the strategy’s enduring edge.

Vanguard Value Index Adm's Prospectus Adjusted Expense Ratio is 0.05% per year. It places it in the cheapest quintile of the Morningstar US Fund Large Value Category, where the median fee is 0.75% per year. This cost positioning translates into a Medalist Rating Price Score of 2.44, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.