Fund Evaluator:

Vanguard Morn Small Cap Index Investor Overview

Vanguard Morn Small Cap Index Investor (NAESX) is a passively managed U.S. Equity Small Blend fund. Vanguard launched the fund in 1960.

The investment seeks to track the performance of the CRSP U.S. Small Cap Index that measures the investment return of small-capitalization stocks. The fund advisor employs an indexing investment approach designed to track the performance of the CRSP U.S. Small Cap Index, a broadly diversified index of stocks of small U.S. companies. The advisor attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

About Vanguard Morn Small Cap Index Investor (NAESX)

There are 2 members of the management team with an average tenure of 2.44 years: Aaron Choi (2025), Kenny Narzikul (2023). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: DJ US Total Stock Market TR USD index with a weighting of 100% and Morningstar US Small TR USD index with a weighting of 100%. Vanguard Morn Small Cap Index Investor has 1317 securities in its portfolio. The top 10 holdings constitute 4.3% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.

Vanguard Morn Small Cap Index Investor is part of the Equity global asset class and is within the U.S. Equity fund group. Vanguard Morn Small Cap Index Investor has 1.6% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 96.8%. There is 1.6% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). Vanguard Morn Small Cap Index Investor has 1.6% of the portfolio in cash.

Assets Under Management

The fund has $292 million in total assets, which is below the $685 million average for the Small Blend category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

NAESX Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Vanguard Morn Small Cap Index Investor expense ratio is low compared to funds in the Small Blend category. Vanguard Morn Small Cap Index Investor has an expense ratio of 0.17%, which is 84% lower than its category average, making the fund expense ratio grade a A. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Vanguard Morn Small Cap Index Investor has a portfolio turnover rate of 17%, indicating that holds its assets around 0.1 years. By way of comparison, the average portfolio turnover is 66% for the Small Blend category.

Recently, in the month of July 2026, Vanguard Morn Small Cap Index Investor returned -2.6%, which earned it a grade of C, as the Small Blend category had an average return of -2.8%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.

Vanguard Morn Small Cap Index Investor has a trailing yield of 1.10%, which is above the 0.42% category average. The fund normally distributes its income quarterly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Vanguard Morn Small Cap Index Investor Grades

Year to date, the fund has returned 15.1%, 3.1 percentage points worse than the category, which translates into a grade of D. The fund has returned 23.7% over the past year (grade of D), 13.7% over the past three years (grade of C) and 7.3% per year over the past five years (grade of C) and 10.8% per year over the past 10 years (grade of B).

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