On the lookout for a Small Cap Value fund? Starting with T. Rowe Price Small Cap Value Fd (PRSVX - Free Report) is one possibility. PRSVX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes PRSVX as Small Cap Value, which is a segment packed with options. Known for investing in companies with market caps under $2 billion, Small Cap Value mutual funds represent good value because of many things; stocks in these funds offer low P/E ratios, high dividend yields, and better-than-average P/S ratios.
History of Fund/Manager
PRSVX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price Small Cap Value Fd made its debut in June of 1988, and since then, PRSVX has accumulated about $7.96 billion in assets, per the most up-to-date date available. J. David Wagner is the fund's current manager and has held that role since June of 2014.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 13.65%, 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 11.46%, which places it in the top 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 10.4%, the standard deviation of PRSVX over the past three years is 12.39%. The standard deviation of the fund over the past 5 years is 12.41% compared to the category average of 13.27%. This makes the fund less volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In PRSVX's case, the fund lost 47.38% in the most recent bear market and outperformed its peer group by 3.66%. This makes the fund a possibly better choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.02, 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. The fund has produced a negative alpha over the past 5 years of -1.35, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 principally on equities that are traded in the United States.
The mutual fund currently has 97.89% of its holdings in stocks, with an average market capitalization of $2.60 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
Turnover is 18.2%, which means this fund makes fewer trades than comparable funds.
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, PRSVX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.30%. From a cost perspective, PRSVX is actually cheaper than its peers.
This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.
Overall, T. Rowe Price Small Cap Value Fd 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.
This could just be the start of your research on PRSVXin the Small Cap Value category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.