Quant funds -- quant is short for quantitative -- use computer models rather than humans to pick stocks and are a growing segment of the fund market. They're also a natural extension for index pioneer Vanguard, which relies heavily on computers to manage its funds that simply seek to match their bogeys. Its quant funds, by contrast, seek to beat their benchmarks.
The latest addition to the Valley Forge, Pa., firm's computer-driven lineup is Vanguard Strategic Small Cap Equity. The fund (symbol VSTCX; 800-635-1511) cherry picks the most promising stocks in the MSCI US Small Cap 1750 Index using three models: one that focus on measures of value, such as price-earnings ratios; another that looks for stocks with upward price and earnings momentum; and a third that hunts for earnings growth.
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