Any investors hoping to find a Small Cap Blend fund could think about starting with T. Rowe Price Small Cap Stock Fund (OTCFX Quick QuoteOTCFX - Free Report) . OTCFX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various 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

OTCFX is a part of the T. Rowe Price family of funds, a company based out of Baltimore, MD. Since T. Rowe Price Small Cap Stock Fund made its debut in June of 1956, OTCFX has garnered more than $2.44 billion in assets. The fund's current manager, Alex Roik, has been in charge of the fund since July of 2023.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 9.44%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 6.55%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. OTCFX's standard deviation over the past three years is 19.69% compared to the category average of 15.77%. The standard deviation of the fund over the past 5 years is 18.5% compared to the category average of 15.61%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. OTCFX has a 5-year beta of 0.97, which means it is likely to be as volatile as the market average. 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. OTCFX has generated a negative alpha over the past five years of -4.91, demonstrating that 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.

This fund is currently holding about 91.9% in stocks, which have an average market capitalization of $6.52 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Other
• Technology
• Industrial Cyclical

Turnover is 58.7%, which means, on average, the fund makes fewer trades than its comparable peers.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, OTCFX is a no load fund. It has an expense ratio of 0.90% compared to the category average of 1%. Looking at the fund from a cost perspective, OTCFX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, T. Rowe Price Small Cap Stock Fund ( OTCFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, T. Rowe Price Small Cap Stock Fund ( OTCFX ) looks like a good potential choice for investors right now.

Your research on the Small Cap Blend segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.