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Is T. Rowe Price Small Cap Stock Fund (OTCFX) a Strong Mutual Fund Pick Right Now?
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There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Small Cap Stock Fund (OTCFX - Free Report) . OTCFX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify OTCFX in the Small Cap Blend category, an area rife with potential choices. Small Cap Blend mutual funds usually target companies with a market capitalization of less than $2 billion. A small-cap blend mutual fund allows investors to diversify their funds among various types of small-cap stocks, which can help reduce the volatility inherent in lower market cap companies.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of OTCFX. T. Rowe Price Small Cap Stock Fund made its debut in June of 1956, and since then, OTCFX has accumulated about $4.46 billion in assets, per the most up-to-date date available. Frank Alonso is the fund's current manager and has held that role since October of 2016.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 14.63%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 14.62%, which places it in the middle third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 17.24%, the standard deviation of OTCFX over the past three years is 21.84%. Looking at the past 5 years, the fund's standard deviation is 18.51% compared to the category average of 14.77%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 1.11, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -0.28, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.
Currently, this mutual fund is holding 90.83% stock in stocks, with an average market capitalization of $5.97 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Industrial Cyclical
Health
Other
Technology
Turnover is about 22.4%, so those in charge of the fund make fewer trades than the average comparable fund.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, OTCFX is a no load fund. It has an expense ratio of 0.89% compared to the category average of 1.08%. Looking at the fund from a cost perspective, OTCFX is actually cheaper than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Small Cap Stock Fund ( OTCFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Small Cap Blend area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into OTCFX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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Is T. Rowe Price Small Cap Stock Fund (OTCFX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is T. Rowe Price Small Cap Stock Fund (OTCFX - Free Report) . OTCFX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify OTCFX in the Small Cap Blend category, an area rife with potential choices. Small Cap Blend mutual funds usually target companies with a market capitalization of less than $2 billion. A small-cap blend mutual fund allows investors to diversify their funds among various types of small-cap stocks, which can help reduce the volatility inherent in lower market cap companies.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of OTCFX. T. Rowe Price Small Cap Stock Fund made its debut in June of 1956, and since then, OTCFX has accumulated about $4.46 billion in assets, per the most up-to-date date available. Frank Alonso is the fund's current manager and has held that role since October of 2016.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 14.63%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 14.62%, which places it in the middle third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 17.24%, the standard deviation of OTCFX over the past three years is 21.84%. Looking at the past 5 years, the fund's standard deviation is 18.51% compared to the category average of 14.77%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 1.11, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -0.28, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.
Currently, this mutual fund is holding 90.83% stock in stocks, with an average market capitalization of $5.97 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Industrial Cyclical
- Health
- Other
- Technology
Turnover is about 22.4%, so those in charge of the fund make fewer trades than the average comparable fund.Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, OTCFX is a no load fund. It has an expense ratio of 0.89% compared to the category average of 1.08%. Looking at the fund from a cost perspective, OTCFX is actually cheaper than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Small Cap Stock Fund ( OTCFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Small Cap Blend area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into OTCFX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.