Vanguard’s Market Neutral Fund may have been an underperformer in 2017, but that hasn't stopped Morningstar from recommending the low-cost investment vehicle.

In a blog post, Jason Kephart, a senior manager research analyst at Morningstar, said the fund's preference for cheap companies hurt returns last year but its quantitative strategy and “rock bottom” fees, are reasons to consider owning the fund. Vanguard's Market Neutral Fund invests in stocks that receive top scores when it comes to valuation, growth, quality, momentum and management decisions when compared with peers. The idea is to find stocks that can grow faster from an earnings perspective but trade at a discount to rivals. The fund also shorts stocks that score lowest in the criteria.

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