Table of Contents

Value stocks typically trade at low prices relative to performance. These five funds are among the few small-cap index funds that focus all or in part on value selection:

  • Vanguard Small-Cap Value Index Fund (VSIAX)
  • Dimensional Tax-Managed U.S. Targeted Value Portfolio (DTMVX)
  • Dimensional U.S. Targeted Value Portfolio (DFFVX)
  • TIAA-CREF Small-Cap Blend Index Fund (TISBX)
  • Fidelity Small Cap Enhanced Index Fund (FCPEX)

For a diversified portfolio, consider adding these small-cap index funds that focus mostly or all on value.

The Vanguard Small-Cap Value Index Fund

The Small-Cap Value Index Fund is closed to new investors; however, Vanguard manages an exchange traded fund (ETF) version of the investment called Vanguard Small-Cap Value ETF (VBR).

As of Q1 2021, the mutual fund held about $44.7 billion in small- and mid-cap stocks that track the CRSP U.S. Small-Cap Value Index. The fund's expense ratio is relatively low at 0.07%, which is the same as the ETF version (also 0.07%).

Dimensional U.S. Targeted Value Portfolio

The U.S. Targeted Value Portfolio invests at least 80% of assets in small- and mid-cap companies that Dimensional believes are value stocks with higher profitability. It looks for companies that have a low price-to-book ratio, and will also consider price-to-cash flow and price-to-earnings ratios. The fund's benchmark is the Russel 2000 Value Index.

As of Q1 2021, it held $5.9 billion in assets, with 24.3% allocated to the financial sector, 22.4% to the industrial goods sector, and 15.1% to consumer discretionary. It has an expense ratio of 0.44%.

Dimensional Tax-Managed U.S. Targeted Value Portfolio

The Tax-Managed U.S. Targeted Value Portfolio is similar to the fund above, but with an emphasis on minimizing federal taxes. Dimensional achieves this by offsetting capital gains with losses and delaying capital gains until they are taxed at lower, long-term rates. Average turnover is about 24% of its portfolio. The fund's benchmark is the Russel 2000 Value Index.

As of Q1 2021, the fund held $12.9 billion in assets, with 27.6% allocated to financials, 21.6% to industrials, and 14% to consumer discretionary. It has an expense ratio of 0.33%.

TIAA-CREF Small-Cap Blend Index Fund

The TIAA-CREF Small-Cap Blend Index Fund invests at least 80% of its assets in value and growth stocks found in the Russell 2000 Index.

At the end of April 2021, the fund held $4.8 billion invested in more than 1,900 positions. Healthcare dominated its allocation at 21%, followed by financials with 17.2%, and information technology and industrials each with about 15%. Its expense ratio is 0.06%.

Fidelity Small Cap Enhanced Index Fund

The Small-Cap Enhanced Index Fund invests about 80% of assets in stocks that make up the Russell 2000 Index, but Fidelity aims to beat the index by using computer-aided, quantitative analysis to make its picks.

As of Q1 2021, the fund held about $729 million in assets, with 23.1% allocated to healthcare, 16.6% to financials, and 16.3% to information technology. Its expense ratio is 0.64%.