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Is DFA Continental Small Company I (DFCSX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Europe - Equity funds, a place to start could be DFA Continental Small Company I (DFCSX - Free Report) . DFCSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Europe - Equity mutual funds is an area filled with options, like DFCSX. Europe - Equity mutual funds tend to invest their assets in stocks across the European continent, including countries such as Great Britain, Germany, France, Italy, and Spain. European funds generally offer slower growth but can offer solid levels of stability.

History of Fund/Manager

Dimensional is based in Austin, TX, and is the manager of DFCSX. Since DFA Continental Small Company I made its debut in April of 1988, DFCSX has garnered more than $592.35 million in assets. The fund is currently managed by a team of investment professionals.

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 15.28%, and it sits in the top 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 19.2%, 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. The standard deviation of DFCSX over the past three years is 12.93% compared to the category average of 11.96%. Looking at the past 5 years, the fund's standard deviation is 13.35% compared to the category average of 11.66%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. DFCSX lost 61.77% in the most recent bear market and underperformed its peer group by 3.02%. 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 0.89, so investors should note that it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 1.61, which shows that managers in this portfolio are skilled in picking 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, DFCSX is a no load fund. It has an expense ratio of 0.56% compared to the category average of 1.50%. From a cost perspective, DFCSX is actually cheaper than its peers.

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 Continental Small Company I has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong 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 DFCSXin the Europe - Equity 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.




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