Vanguard Explorer Fund - Investment Profile
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Vanguard ®
Vanguard ® Explorer™ Fund
Product Summary Vanguard Style View : Small Growth
Small- and mid-cap growth equity.
Seeks long-term capital appreciation. Broadly diversified portfolio of small- and mid-capitalization
growth stocks.
Broadly diversified, multimanager structure.
Investment style
Fundamental and quantitative approaches. Value Blend Growth
Tends to be less volatile than peer funds.
Market capitalization
Large
Mid
Small
Central tendency
Expected range of fund holdings
Quarterly Commentary
The investment environment grew more challenging as the third Note: Company returns may differ if a security was held in the
quarter of 2021 progressed. Corporate earnings were healthy portfolio for less than the full period.
across much of the globe, with many economies back open,
vaccination rates climbing, and labor markets regaining lost
ground. Sentiment deteriorated, though, as the COVID-19 Delta People and Process
variant spread, high inflation readings in some economies
(including the U.S.) began to look as if they might persist for a Vanguard Explorer Fund seeks long-term capital appreciation using
while, and worries surfaced about contagion from debt issues in a multimanager approach that provides exposure to a broad
the Chinese property sector. universe of small- and mid-capitalization growth stocks. The fund’s
five investment advisors—four using a fundamental approach and
Global stocks sank in September to finish the quarter down
one using a quantitative approach—manage independent
roughly 1%, as measured by the FTSE Global All Cap Index. The
subportfolios. The multimanager structure diversifies risk and
U.S. and the Asia-Pacific region held up better than developed
increases investment capacity, while providing individual
Europe and especially emerging markets.
managers with the opportunity to generate superior returns. The
Relative to the broader market, small- to mid-size companies fund’s broad diversification tends to produce lower volatility.
posted weaker results for the quarter, as the Russell 2500 Growth Vanguard may invest the fund’s cash flows in equity index futures
Index (–3.53%)—the benchmark index for Vanguard Explorer and/or exchange-traded funds to manage liquidity needs while
Fund—underperformed the broader market index, as measured by ensuring that the fund remains fully invested.
the Russell 3000 Index (–0.10%).
For the quarter, the fund outperformed both its benchmark Vanguard Quantitative Equity Group
(–3.53%) and its peer-group average return (–2.14%).
Using an active quantitative process, the firm seeks to modestly
Strong stock selection in health care (–6.5%), industrials (–3.0%), outperform the Russell 2500 Growth Index while tightly controlling
and communication services (–17%) primarily drove the risk factors relative to the index. Stock selection involves the use
outperformance. A position in ICON (+27%) within health care and of proprietary computer models, which rank stocks of similar size
an overweight position in TriNet Group (+31%) in industrials, and industry sector based on valuation, momentum, and earnings
contributed notably. An underweighting of Boston Beer Company growth prospects. The portfolio manager seeks to add alpha by
(–48%) in consumer staples (–14.5%) and Plug Power Inc. (–25%) overweighting the most attractive stocks and underweighting or
in industrials contributed as well. Sector positioning—specifically, avoiding the least attractive, based on their peer rankings. The
an overweight to financials (+5.2%) and an underweight to health resulting portfolio is optimized to maintain neutral weightings
care—also boosted performance. based on market capitalization, sector, and style, and limit
exposure to individual securities.
For the 12 months ended September 30, 2021, the fund
outperformed its benchmark (+31.98%) and its peer average
(+37.77%). Strong selection—particularly in financials (+32.8%),
health care (+19.9%), materials (21.6%), and industrials
(+38.6%)—primarily drove performance. Notable contributors
included holding SVB Financial Group (+169%), an overweight
allocation to Western Alliance Bancorporation (+201%) in
financials, and an overweight allocation to SunPower (+68%) in
information technology (+43.9%). Sector positioning—specifically,
an underweight to health care and an overweight to
industrials—also lifted returns.
As of September 30, 2021Vanguard Explorer™ Fund
Firm Description
Firm Description
Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is
among the world's largest equity and fixed income managers. As Established in 2005, Stephens Investment Management Group,
chief investment officer, Gregory Davis, CFA, oversees LLC, Little Rock, Arkansas, and Houston, Texas, specializes in the
Vanguard's Equity Index, Quantitative Equity, and Fixed Income management of small and mid-capitalization growth equities. The
Groups. John Ameriks, Ph.D., Principal of and head of Vanguard's firm has advised Vanguard Explorer Fund since 2013.
Quantitative Equity Group, is responsible for all active equity funds
managed by the Investment Management Group. The Quantitative Investment Manager Biographies
Equity Group manages Vanguard active equity mutual funds using
a quantitative investment approach. The group has advised Ryan E. Crane, CFA, Chief Investment Officer. Portfolio manager.
Vanguard Explorer Fund since 1997. Advised the fund since 2013. Worked in investment management
since 1995. B.S., University of Houston.
Investment Manager Biographies
Cesar Orosco, CFA. Senior portfolio manager. Advised the fund ArrowMark Partners
since 2021. Worked in investment management since 2004. B.S.,
Universidad de Lima. Ph.D., University of Pennsylvania. The firm uses in-depth fundamental research to uncover
companies that, in its opinion, can control their own economic
Wellington Management Company LLP destiny. The portfolio managers start by identifying businesses
with strong competitive advantages in industries with high barriers
The firm uses fundamental research and a flexible, opportunistic to entry, then narrow their focus to companies with large potential
approach to select a diversified portfolio of high-quality stocks. The markets and high-quality business models focused on the future.
investment team works with Wellington’s industry analysts to Finally, considerations are made for potential down-side risk,
identify the most attractive companies in each sector. The team resulting in a diversified portfolio of between 75–100 stocks.
seeks to identify companies early in their growth cycle, selecting
70–100 stocks typically representing all sectors.
Firm Description
Firm Description Founded in 2007, ArrowMark Partners, Denver, Colorado, is a
diversified investment management firm that applies its
Founded in 1928, Wellington Management Company LLP, Boston, specialized experience and in-depth fundamental research across a
Massachusetts, is among the nation’s oldest and most respected range of investment strategies designed to meet client needs. The
institutional investment managers. The firm has advised Vanguard firm has advised Vanguard Explorer Fund since 2014.
Explorer Fund since 1967.
Investment Manager Biographies
Investment Manager Biographies
Chad Meade. Portfolio manager. Advised the fund since 2014.
Daniel J. Fitzpatrick, CFA, Senior Managing Director. Portfolio Worked in investment management since 1998. B.S., Virginia
manager. Advised the fund since 2014. Worked in investment Tech.
management since 1997. B.S., Boston College.
Brian Schaub, CFA. Portfolio manager. Advised the fund since
Stephens Investment Management Group, LLC 2014. Worked in investment management since 2000. B.A.,
Williams College.
Stephens Investment Management Group, LLC employs a
disciplined, bottom up investment selection process that combines ClearBridge Investments, LLC
rigorous fundamental analysis with quantitative screening seeking
to identify companies that will exhibit potential for superior The firm seeks to invest in quality growth companies that are
earnings growth. There are two distinctly different types of stocks category leaders (or have the ability to become market leaders),
in which they invest: core growth and earnings catalyst. The and display capital allocation discipline aimed at fueling long-term
characteristics they seek for core growth stocks are consistent sustainable growth. The research process is disciplined and
and predictable earnings growth that is generated by unique, collaborative, with each member of the team executing on a
defensible business models. For earnings catalyst stocks, they are shared investment philosophy and process.
looking for inflection points such as large earnings surprises or
Firm Description
positive revisions to earnings estimates or guidance. They
generally require all stocks to be profitable or on the cusp of
With a legacy dating to 1962, ClearBridge Investments, LLC, New
profitability and exhibiting at least 12% earnings growth. Their
York , New York, is a global equity manager committed to
portfolios generally hold 90 to 110 stocks.
delivering long-term results through active management. The firm
has advised Vanguard Explorer Fund since 2017.
As of September 30, 2021Vanguard Explorer™ Fund
Investment Manager Biographies Aram Green. Portfolio manager. Advised the fund since 2017.
Worked in investment management since 2001. B.A., Union
Jeffrey Russell, CFA. Portfolio manager. Advised the fund since College.
2017. Worked in investment management since 1981. B.S.,
Massachusetts Institute of Technology. M.B.A., Wharton School Matthew Lilling, CFA. Portfolio manager. Advised the fund since
at the University of Pennsylvania. 2020. Worked in investment management since 2006. B.A., Emory
University. M.B.A., Columbia Business School.
Brian Angerame. Portfolio manager. Advised the fund since 2017.
Worked in investment management since 1994. B.A., Dartmouth
College.
Investment Advisors
Fund Assets Managed
% $ Million
Wellington Management Company LLP 36 8,419
ClearBridge Investments, LLC 17 3,967
Vanguard Quantitative Equity Group 16 3,660
ArrowMark Partners 15 3,519
Stephens Investment Management 15 3,588
Group, LLC
Cash investments 1 296
Total 100 23,449
Total Returns
Expense Year
Ratio Quarter to Date 1 Year 3 Years 5 Years 10 Years
Explorer Fund
Investor Shares (12/11/1967) 0.41% -0.91% 12.04% 41.87% 15.83% 18.83% 17.13%
Admiral Shares (11/12/2001) 0.30 -0.89 12.13 42.01 15.96 18.96 17.28
Russell 2500 Growth Index — -3.53 4.84 31.98 16.01 18.21 17.20
Small-Cap Growth Funds Average — -2.14 8.92 37.77 15.59 18.55 16.38
The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will
fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance. The
performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Figures for periods of
less than one year are cumulative returns. All other figures represent average annual returns. Performance figures include the reinvestment of all dividends
and any capital gains distributions. All returns are net of expenses.
Note: Average fund returns are derived from data provided by Lipper, a Thomson Reuters Company. Admiral class shareholders are required to maintain
specific minimum balances and meet other special criteria.
As of September 30, 2021Vanguard Explorer™ Fund
Quarterly Returns: Investor Shares
Year-End
Russell 2500 Assets
Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Explorer Growth Index (Millions)
2021 6.62% 6.05% -0.91% — — — $3,892
2020 -26.74 32.76 6.65 26.62% 31.33% 40.47% 3,969
2019 17.51 4.18 -2.09 9.51 31.26 32.65 3,739
2018 4.14 7.15 8.59 -19.54 -2.50 -7.47 3,084
2017 6.16 4.62 4.44 5.99 22.95 24.46 3,529
2016 -1.18 2.62 8.26 2.32 12.33 9.73 3,491
2015 6.29 0.06 -12.89 3.25 -4.34 -0.19 3,673
2014 0.80 1.51 -4.67 6.53 3.91 7.05 4,527
2013 12.58 4.90 11.70 9.44 44.36 40.65 5,537
2012 14.12 -6.19 4.45 2.75 14.89 16.13 5,027
2011 9.30 0.30 -21.06 13.37 -1.89 -1.57 5,537
Quarterly Returns: Admiral Shares
Year-End
Russell 2500 Assets
Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Explorer Growth Index (Millions)
2021 6.65% 6.08% -0.89% — — — $19,556
2020 -26.73 32.80 6.69 26.65% 31.48% 40.47% 17,321
2019 17.55 4.20 -2.07 9.54 31.40 32.65 13,459
2018 4.17 7.18 8.62 -19.51 -2.39 -7.47 10,384
2017 6.19 4.65 4.48 6.02 23.10 24.46 9,940
2016 -1.15 2.67 8.29 2.34 12.47 9.73 7,861
2015 6.33 0.10 -12.87 3.28 -4.22 -0.19 7,315
2014 0.84 1.55 -4.63 6.57 4.08 7.05 7,735
2013 12.62 4.94 11.75 9.48 44.59 40.65 7,271
2012 14.17 -6.17 4.49 2.79 15.07 16.13 3,951
2011 9.35 0.35 -21.02 13.41 -1.72 -1.57 3,282
Volatility Measures
R-Squared Beta
Russell 2500 Growth Index 0.97 1.00
DJ US Total Stock Mkt Float Adj Idx 0.91 1.20
R-squared and beta are calculated from trailing 36-month fund returns
relative to the associated benchmark.
As of September 30, 2021Vanguard Explorer™ Fund
Fund Facts Top 10 Largest Holdings
Investor Admiral
Shares Shares % of
Fund Number 0024 5024 Total Net Assets
Ticker VEXPX VEXRX ICON plc 1.2%
Newspaper Listing Explr ExplrAdml Momentive Global Inc. 0.8
CUSIP Number 921926101 921926200 Burlington Stores Inc. 0.8
Assets (millions) $3,892 $19,556 TriNet Group Inc. 0.7
(Total $23,448) Trex Co. Inc. 0.7
Inception 12/11/1967 11/12/2001 Omnicell Inc. 0.7
Expense Ratio New Relic Inc. 0.7
(as of 2/2021) 0.41% 0.30%
Clean Harbors Inc. 0.7
Middleby Corp. 0.6
ON Semiconductor Corp. 0.6
Equity Characteristics Total 7.5%
Russell The holdings listed exclude any temporary cash investments and equity
2500 index products.
Growth
Explorer Index
Number of stocks 784 1,453
Median market cap $6.4 Billion $6.0 Billion
Average market cap $10.3 Billion $7.7 Billion
Price/earnings ratio 24.6x 28.9x
Price/book ratio 3.9x 6.2x
Return on equity 9.3% 5.5%
Earnings growth rate 16.6% 15.3%
Equity yield (dividend) 0.5% 0.4%
Foreign holdings 2.8% 0.0%
Short-term reserves 2.2% —
Turnover rate (fiscal year end) 42.6% —
Sector Diversification (% of Stocks)
Russell 2500 Overweight/
Explorer Growth Index Underweight
Communication Services 3.0% 2.4% 0.6
Consumer Discretionary 13.8 15.4 -1.6
Consumer Staples 2.8 2.7 0.1
Energy 1.3 1.9 -0.6
Financials 8.7 5.4 3.3
Health Care 22.4 24.6 -2.2
Industrials 19.1 13.9 5.2
Information Technology 22.9 27.7 -4.8
Materials 2.3 2.9 -0.6
Other 0.1 0.0 0.1
Real Estate 3.1 2.7 0.4
Utilities 0.5 0.4 0.1
Total 100.0% 100.0%
Sector categories are based on the Global Industry Classification Standard
(GICS), except for the Other category (if applicable), which includes
securities that have not been provided a GICS classification as of the effective
reporting period.
As of September 30, 2021Vanguard Explorer™ Fund
3 month attribution
Portfolio Benchmark Attribution
Avg. 3 mo. Contrib. Avg. 3 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Health Care 21.7 0.7 0.2 24.8 -6.5 -1.6 0.1 1.5 1.6
Industrials 18.2 0.3 0.0 14.0 -3.0 -0.4 0.0 0.6 0.6
Communication Services 3.4 -5.4 -0.2 2.7 -15.7 -0.5 -0.1 0.4 0.3
Consumer Staples 2.8 -6.1 -0.2 2.8 -14.5 -0.4 0.0 0.3 0.3
Materials 2.0 5.0 0.1 3.2 -7.6 -0.3 0.1 0.3 0.3
Financials 9.2 3.4 0.3 4.9 5.2 0.2 0.4 -0.2 0.2
Cash 2.7 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.1
Energy 1.0 -0.4 0.0 1.7 -4.2 -0.1 0.0 0.0 0.1
Utilities 0.5 -6.0 0.0 0.4 2.9 0.0 0.0 0.0 0.0
Real Estate 2.9 0.0 0.0 2.7 2.5 0.1 0.0 -0.1 -0.1
Information Technology 21.9 0.4 0.1 27.2 0.5 0.1 -0.2 0.0 -0.2
Consumer Discretionary 13.8 -7.9 -1.1 15.5 -4.5 -0.7 0.0 -0.5 -0.4
Total 100.0 -0.8 -0.8 100.0 -3.5 -3.5 0.5 2.3 2.7
12 month attribution
Portfolio Benchmark Attribution
Avg. 12 mo. Contrib. Avg. 12 mo. Contrib. Alloc. Select Total
weight return Return weight return Return effect effect effect
Health Care 22.8 31.7 8.3 27.8 19.9 7.1 0.6 1.9 2.5
Financials 8.7 61.5 4.5 4.2 32.8 1.3 0.1 2.0 2.1
Industrials 18.1 43.4 7.8 13.2 38.6 4.7 0.4 0.8 1.2
Materials 2.0 71.5 1.2 3.1 21.6 0.7 0.3 0.9 1.1
Communication Services 3.3 46.7 1.5 2.6 15.0 0.4 0.0 1.0 1.0
Consumer Staples 2.7 17.7 0.5 2.9 8.4 0.3 0.2 0.3 0.5
Energy 0.6 116.4 0.4 0.5 109.8 0.0 0.4 0.1 0.5
Consumer Discretionary 13.0 39.9 4.9 13.4 39.9 4.4 0.2 0.1 0.3
Utilities 0.4 18.2 0.1 0.8 30.9 0.3 0.2 0.1 0.3
Information Technology 22.6 48.0 10.9 28.7 43.6 12.0 -0.4 0.6 0.1
Real Estate 2.8 32.2 0.9 2.6 36.9 0.9 0.1 0.0 0.1
Cash 2.9 0.1 0.0 0.0 0.0 0.0 -0.8 0.0 -0.8
Total 100.0 40.9 40.9 100.0 32.0 32.0 1.3 7.7 9.0
The portfolio attribution data shown above is provided by FactSet based on information provided by Vanguard about the fund's daily portfolio holdings as of
the market close. Because the fund buys and sells stocks throughout the trading day and not necessarily at the market close, the attribution data shown
above is an estimate and may not precisely reflect actual attribution information. Information noted above does not reflect fair-value adjustments to prices of
foreign securities held in the portfolio.
Top contributors—3 month Top detractors—3 month
3 mo. Total Ending Bench 3 mo. Total Ending Bench
return effect weight weight return effect weight weight
ICON plc 26.8 0.3 1.2 0.0 Ollie's Bargain Outlet Holdings Inc. -28.3 -0.1 0.4 0.0
TriNet Group Inc. 30.5 0.2 0.7 0.1 Bill.com Holdings Inc. 45.7 -0.2 0.1 0.8
Plug Power Inc. -25.3 0.1 0.0 0.5 MongoDB Inc. 30.4 -0.2 0.1 1.1
Methanex Corporation 39.6 0.1 0.5 0.0 Wix.com Ltd. -32.5 -0.2 0.4 0.0
Boston Beer Company Inc. -48.4 0.1 0.0 0.2 Vroom Inc. -47.3 -0.2 0.2 0.0
As of September 30, 2021Vanguard Explorer™ Fund
Top contributors—12 month Top detractors—12 month
12 mo. Total Ending Bench 12 mo. Total Ending Bench
return effect weight weight return effect weight weight
SVB Financial Group 168.8 0.5 0.6 0.0 Vroom Inc. -57.4 -0.2 0.2 0.0
SunPower Corporation 68.1 0.5 0.0 0.1 Bill.com Holdings Inc. 151.3 -0.3 0.1 0.8
Houghton Mifflin Harcourt Wix.com Ltd. -23.1 -0.3 0.4 0.0
Company 676.3 0.4 0.4 0.1
MongoDB Inc. 25.3 -0.3 0.1 1.1
Western Alliance Bancorporation 200.6 0.4 0.4 0.2
Cloudflare Inc. 155.3 -0.3 0.0 0.0
SunRun Inc. 11.1 0.3 0.0 0.0
As of September 30, 2021Vanguard Explorer™ Fund
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