There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is DFA US Large Cap Value II . DFCVX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
DFCVX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream fund these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds'high growth opportunity are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
History of Fund/Manager
Dimensional is based in Austin, TX, and is the manager of DFCVX. The DFA US Large Cap Value II made its debut in March of 1996 and DFCVX has managed to accumulate roughly $172.41 million in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Investors naturally seek funds with strong performance. DFCVX has a 5-year annualized total return of 7.76% and it sits 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 11.07%, 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, DFCVX's standard deviation comes in at 14.22%, compared to the category average of 12.49%. Over the past 5 years, the standard deviation of the fund is 13.74% compared to the category average of 12.13%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. DFCVX lost 57.81% in the most recent bear market and underperformed its peer group by 7%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -3.46, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Exploring 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.
Currently, this mutual fund is holding 97.51% stock in stocks and it has a negligible amount of assets in foreign securities. Turnover is about 0%, so those in charge of the fund make 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, DFCVX is a no load fund. It has an expense ratio of 0.16% compared to the category average of 1.01%. So, DFCVX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Overall, DFA US Large Cap Value II ( DFCVX ) 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 DFCVXin the Large 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.