The fund provides broad exposure to smaller companies across developed markets. It aims to track the MSCI World Small Cap Index, which includes around 4,000 companies. The fund invests in all the companies in the index and in the same proportion. This should help it track the index closely.
Vanguard is a pioneer in passive investing, having created the first retail index fund 50 years ago. It now runs some of the biggest index funds in the world. Given its size, it has a large investment team with the expertise and resources to help its funds track indices and markets as closely as possible, while having scale to keep costs down.
Smaller companies are a more specialist part of the market and we think that Vanguard is well placed to manage this fund effectively.
Vanguard funds are run by a large global team, and their team-based approach means there’s no named manager on this fund. We rate Vanguard’s index team highly given their strong long-term track record in managing index tracker funds and their consistent investment approach.
Keeping costs low is a key part of Vanguard’s process. To help do this, Vanguard will lend some of the investments in the fund to other providers in exchange for a fee. This helps offset some of the costs involved in running the fund but adds risk.
While smaller companies have lagged their larger counterparts in recent years, they’ve performed better over the long term. We think they offer strong growth potential for the future as they’re often among the most innovative businesses and have plenty of room to grow. Although, we recognise there can be periods where smaller companies don’t perform as well as larger ones, and they’re higher risk. This fund should therefore only be considered for a portfolio with a longer investment outlook that can accept periods of high volatility.
We think this fund could be a good way to gain broad exposure to smaller companies. It could also provide some diversification to an investment portfolio focused on shares in larger companies, as they tend to perform differently.
Given Vanguard’s size, experience and expertise in running index tracker funds, we expect the fund to track the index closely, though there are no guarantees.
Please note that as this fund is listed offshore, investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.
We’ve also published a full fund update alongside this notification, where you can find out more about the managers, their investment process and the fund’s performance.
Although we're adding the fund to the Wealth Shortlist, this isn't a recommendation to make any changes to an investment portfolio. Investors should make sure any investments match their investment goals and attitude to risk and are held as part of a diversified portfolio. If you're not sure if an investment is suitable for your circumstances, please seek personal advice. Investments go up and down in value so you could get back less than you invest.
For more details on the fund, including its risks and charges, use the links to the factsheet and key investor information.
Annual percentage growth
Dec 20 -Dec 21 | Dec 21 – Dec 22 | Dec 22 – Dec 23 | Dec 23 – Dec 24 | Dec 24 – Dec 25 | |
|---|---|---|---|---|---|
16.67% | -8.55% | 9.27% | 9.93% | 11.56% | |
MSCI World Small Cap Index | 16.82% | -8.52% | 9.23% | 10.09% | 11.62% |