VBK: Small-Cap Growth Stocks Are Undervalued But Remain Volatile

Summary

• VBK invests in small-cap U.S. growth stocks.
• The fund is most likely undervalued and should continue to perform reasonably well.
• However, the fund is large, diversified, and likely subject to "noisy" rebalancings which affect the investment proposition longer term.
• I think VBK should do well, but recognize that it is a better source of beta than alpha.
• VBK might be undervalued, but in volatility-adjusted terms, it is unlikely to generate especially impressive returns.

bpawesome

Vanguard Small-Cap Growth Index Fund ETF (NYSEARCA:VBK) is an exchange-traded fund that provides investors with exposure to small-cap growth stocks. The fund's benchmark is the CRSP US Small Cap Growth Index. The expense ratio is cheap, at 0.07% (as of the end

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.