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Just took a look at the details of the Vanguard Small Cap Value Fund on the Vanguard website.

Before looking, I would have guessed the fund was made up of slower growing, but low P/E stocks.

The holdings are certainly slow growing- their earnings growth rate is listed on the site at 3.1%. But they're hardly cheap, with an average P/E of 20!

I also would have guessed that the dividends paid by these holdings would be taxable at the perferential dividend tax rate for stocks. In fact, 4 of the fund's top 10 holdings are REITs, not eligible for this tax break.

Just goes to show the importance of research when buying any fund- you may not be getting what you expect. (I own only common stocks, but my mother owns some Vanguard funds, including this one)

Nick
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