Monday, October 16, 2006

Index Fund Valuation Matrix

The end of quarter numbers for the third quarter of 2006 are out for the index funds at the Vanguard website. The vanguard group publishes the stock attributes of the various index funds they offer in the middle of the each month for the previous month's end date.

Large-Cap Index Funds and their P/E ratios
  • S&P 500 index fund (VFINX) - 17.0
  • Dividend Appreciation index fund (VDAIX) - 17.7
  • FTSE Social index fund (VFTSX) - 18.5
  • Growth index fund (VIGRX) - 21.2
  • Large-Cap index fund (VLACX) - 17.3
  • Total Stock Market index fund (VTSMX) - 17.9
  • Value index fund (VIVAX) - 14.7

Mid/Small Cap Index Funds and their P/E ratios

  • Extended Market index fund (VEXMX) - 23.2
  • Mid-Cap index fund (VIMSX) - 19.5
  • Small-Cap Growth index fund (VISGX) - 26.5
  • Small-Cap index fund (NAESX) - 22.5
  • Small-Cap Value index fund (VISVX) - 19.7

Sector Specific Index Funds and their P/E ratios

  • REIT index fund (VGSIX) - 46.5%

Notes and Observations:

  • The P/E ratio of REIT index fund is 46.5. During the NASDAQ 5000 days, we saw a number similar or greater than this P/E ratio. I don't need to tell you what happened to NASDAQ after year 2000.
  • The Large-Cap indexes are cheaper than the small cap indexes today. The big runup in last few years in the small and mid cap indexes have extended the P/E ratios of these indexes in unwanted territory for me.
  • Small cap value index's P/E (19.7) is higher than the entire total stock market index's P/E (17.9) today. Is there a value in small-value today? Relatively speaking, no.- The value index fund which tracks the MSCI US Prime Market index has the lowest P/E ratio among all these indexes.

Data Source:

1 comment:

Anonymous said...

p/e isn't a very good valuation metric for a reit. you should look at FFO as well as nav & yield.