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Is DFA Emerging Markets Core Equity I (DFCEX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Non US - Equity fund? Starting with DFA Emerging Markets Core Equity I (DFCEX - Free Report) should not be a possibility at this time. DFCEX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes DFCEX as Non US - Equity, a segment stacked high with options. Non US - Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.

History of Fund/Manager

Dimensional is based in Austin, TX, and is the manager of DFCEX. DFA Emerging Markets Core Equity I made its debut in May of 2005, and since then, DFCEX has accumulated about $29.71 billion in assets, per the most up-to-date date available. 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. DFCEX has a 5-year annualized total return of 0.9% and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.28%, 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. Over the past three years, DFCEX's standard deviation comes in at 14.87%, compared to the category average of 12.9%. The standard deviation of the fund over the past 5 years is 14.66% compared to the category average of 12.5%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. DFCEX lost 61.22% in the most recent bear market and outperformed its peer group by 2.82%. This could mean that the fund is a better choice than comparable funds during a bear market.

Investors should note that the fund has a 5-year beta of 0.9, so it is likely going to be 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. Over the past 5 years, the fund has a negative alpha of -7.95. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, DFCEX is a no load fund. It has an expense ratio of 0.53% compared to the category average of 1.28%. DFCEX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, DFA Emerging Markets Core Equity I ( DFCEX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

This could just be the start of your research on DFCEXin the Non US - 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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