Vanguard Mutual Fund a Star

NEW YORK (TheStreet) -- Within the broad arsenal of Vanguard products, one successful fund has truly set the stage for growth in the 2009 market environment. The Vanguard Capital Value Fund(VCVLX Quote) is the firm's top product with a year-to-date growth rate of 54.40%. VCVLX's closest competition includes the Emerging Markets Stock Index(VEIEX Quote) and Precious Metals and Mining(VGPMX Quote) with respective year-to-date growth rates of 51.21% and 48.21%.

According to its product summary, VCVLX seeks maximum long-term total return by investing in "stocks across the capitalization spectrum considered by the fund's advisor (Wellington Management Company) to be undervalued." This mutual fund holds 75 individual stocks with total net assets of $489.9 million as of June 30.

By sector, VCVLX's portfolio composition is heavily weighted in financials and energy with 24.10% and 19%, respectively. Other notable weightings include industrials (18%), health care (14.20%), consumer discretionary (5.40%) and utilities (7.70%).

Curiously, these sector weightings have shifted dramatically over the past few years; since June 2008, the health care sector has sharply dropped out of VCVLX's portfolio (declining from 18.30% of holdings to a current 14.20%). Generally speaking, consumer discretionary, consumer staples, health care and information technology lost relative weight in the fund while energy, financials, industrials, materials, telecomm and utilities sectors gained prominence. Most notably, VCVLX's holdings in information technology dropped 9.20% since June 2008.

In terms of company-specific holdings, VCVLX's top holdings follow the model set forth by its sector distribution, particularly seen through the financial sector. In addition, the fund's top holdings reflect some emphasis on pharmaceuticals and airlines (contributing to health care and industrials, respectively).

As of June 30, VCVLX's largest individual holding is tied to banking behemoth Wells Fargo(WFC Quote) with Bank of America(BAC Quote) closely following. Other top 10 holdings include Delta Air Lines(DAL Quote), Merck(MRK Quote), Hess(HES Quote), OAO Gazprom-Sponsored ADR, Walter Energy(WLT Quote), First Solar(FSLR Quote), Hartford Financial Services(HIG Quote) and MetroPCS Communications(PCS Quote).

As of Aug. 6, VCVLX has an SEC yield of 0.49%. Although the fund's trading value has fluctuated over a 52-week period (VCVLX hit a high point of $8.32 in mid-August 2008 and bottomed out in late November of 2008 with a price of $3.73), such turbulence is hardly unexpected given the severity of the stock crash last year. Furthermore, VCVLX is categorized as a 4/5 Risk Level within Vanguard's financial database, so volatility to some degree is expected. In terms of asset class, VCVLX is traded as an aggressive domestic stock fund and maintains an expense ratio of 0.52%.

-- Written by Don Dion in Williamstown, Mass.