In the April 2010 issue, Benjamin Shepherd profiled Vanguard Morgan Growth (VMRGX), launched in 1968 and one of the oldest mutual funds on the market.

Shepherd noted that the fund’s valuation-sensitive strategy had resulted in a heavy allocation to technology names. Technology accounted for almost 41 percent of the fund’s investable assets one year ago. Today the fund’s technology exposure has swelled to almost half of its portfolio.

Vanguard Morgan Growth’s tech-heavy portfolio hasn’t been a liability. The fund has gained 18.7 percent over the past year, outperforming the NASDAQ Composite index by almost 5 percent and the S&P 500 by more than 3 percent.

We expect the fund to remain overweight technology, as reasonably priced stocks remain relatively easy to find in the sector.

Although investors have grown more willing to pay higher prices for exposure to quality technology names, the sector’s average price-to-earnings ratio stands at about 18.

The current valuation is a far cry from the huge premiums investors shelled out a decade ago. But it remains inexpensive compared to prerecession levels, even though demand for technology has recovered nicely.

Vanguard Morgan Growth’s expense ratio has also declined since Shepherd first highlighted the fund. At this time in 2010, Vanguard Morgan Growth charged an annual expense ratio of 0.48 percent.

In the intervening 12 months, inflows and appreciation have welled the fund’s asset base to $9.4 billion from $7.9 billion. Running true to form, Vanguard has passed along the resulting economies of scale to investors, lowering the expense ratio to 0.44 percent.