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Is DFA US Small Cap Institutional (DFSTX) a Strong Mutual Fund Pick Right Now?
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On the lookout for a Small Cap Blend fund? Starting with DFA US Small Cap Institutional (DFSTX - Free Report) is one possibility. DFSTX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes DFSTX as Small Cap Blend, which is an area packed with options. Usually targeting stocks with market caps of less than $2 billion, a Small Cap Blend mutual fund lets investors diversify their funds among other kinds of small-cap equities. This can help reduce risk found in companies that have a lower stock market valuation.
History of Fund/Manager
Dimensional is based in Austin, TX, and is the manager of DFSTX. DFA US Small Cap Institutional made its debut in March of 1992, and since then, DFSTX has accumulated about $17.52 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. DFSTX has a 5-year annualized total return of 3.86% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.17%, 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 15.86%, the standard deviation of DFSTX over the past three years is 15.48%. The standard deviation of the fund over the past 5 years is 14.84% compared to the category average of 15.25%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, DFSTX lost 53.79% and underperformed comparable funds by 1.62%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -4.6. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
The mutual fund currently has 79.33% of its holdings in stocks, with an average market capitalization of $2.37 billion. The fund has the heaviest exposure to the following market sectors:
Other
Finance
Industrial Cyclical
Technology
Turnover is about 12%, so those in charge of the fund make fewer trades than its comparable peers.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DFSTX is a no load fund. It has an expense ratio of 0.37% compared to the category average of 1.04%. So, DFSTX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, DFA US Small Cap Institutional ( DFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, DFA US Small Cap Institutional ( DFSTX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is DFA US Small Cap Institutional (DFSTX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Small Cap Blend fund? Starting with DFA US Small Cap Institutional (DFSTX - Free Report) is one possibility. DFSTX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes DFSTX as Small Cap Blend, which is an area packed with options. Usually targeting stocks with market caps of less than $2 billion, a Small Cap Blend mutual fund lets investors diversify their funds among other kinds of small-cap equities. This can help reduce risk found in companies that have a lower stock market valuation.
History of Fund/Manager
Dimensional is based in Austin, TX, and is the manager of DFSTX. DFA US Small Cap Institutional made its debut in March of 1992, and since then, DFSTX has accumulated about $17.52 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. DFSTX has a 5-year annualized total return of 3.86% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.17%, 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 15.86%, the standard deviation of DFSTX over the past three years is 15.48%. The standard deviation of the fund over the past 5 years is 14.84% compared to the category average of 15.25%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, DFSTX lost 53.79% and underperformed comparable funds by 1.62%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -4.6. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
The mutual fund currently has 79.33% of its holdings in stocks, with an average market capitalization of $2.37 billion. The fund has the heaviest exposure to the following market sectors:
- Other
- Finance
- Industrial Cyclical
- Technology
Turnover is about 12%, so those in charge of the fund make fewer trades than its comparable peers.Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DFSTX is a no load fund. It has an expense ratio of 0.37% compared to the category average of 1.04%. So, DFSTX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, DFA US Small Cap Institutional ( DFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, DFA US Small Cap Institutional ( DFSTX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.