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 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

T. Rowe Price is based in Baltimore, MD, and is the manager of OTCFX. Since T. Rowe Price Small Cap Stock Fund made its debut in June of 1956, OTCFX has garnered more than $2.26 billion in assets. The fund is currently managed by Alex Roik who has been in charge of the fund since July of 2023.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.49%, 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 10.2%, 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 17.45% compared to the category average of 13.27%. Over the past 5 years, the standard deviation of the fund is 17.55% compared to the category average of 14.57%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.99, which means it is hypothetically as volatile as 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. OTCFX has generated a negative alpha over the past five years of -7.11, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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 and it has an expense ratio of 0.92%.

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.

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

Bottom Line

This puts this fund from T. Rowe Price in the top 20% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Small Cap Blend category.

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.