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Is DFA US Small Cap Institutional (DFSTX) a Strong Mutual Fund Pick Right Now?
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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 DFA US Small Cap Institutional (DFSTX - Free Report) . DFSTX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify DFSTX 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
DFSTX finds itself in the Dimensional family, based out of Austin, TX. DFA US Small Cap Institutional made its debut in March of 1992, and since then, DFSTX has accumulated about $18.05 billion in assets, per the most up-to-date date available. The fund's current manager, Jed Fogdall, has been in charge of the fund since February of 2012.
Performance
Of course, investors look for strong performance in funds. DFSTX has a 5-year annualized total return of 7.1% and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.66%, which places it in the bottom 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. DFSTX's standard deviation over the past three years is 16.33% compared to the category average of 16.12%. Over the past 5 years, the standard deviation of the fund is 15.9% compared to the category average of 16.07%. This makes the fund less 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. In DFSTX's case, the fund lost 53.79% in the most recent bear market and underperformed its peer group by 1%. 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 1.13, so investors should note that it is hypothetically more 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. DFSTX has generated a negative alpha over the past five years of -5, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
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 largely on equities that are traded in the United States.
As of the last filing date, the mutual fund has 97.46% of its assets in stocks, with an average market capitalization of $2.40 billion. The fund has the heaviest exposure to the following market sectors:
Other
Finance
Industrial Cyclical
Technology
This fund's turnover is about 12%, so the fund managers are making fewer trades than comparable funds.
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, DFSTX is a no load fund. It has an expense ratio of 0.37% compared to the category average of 1.10%. From a cost perspective, DFSTX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, DFA US Small Cap Institutional ( DFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, DFA US Small Cap Institutional ( DFSTX ) looks like a great potential choice for investors right now.
For additional information on the Small Cap Blend area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into DFSTX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is DFA US Small Cap Institutional (DFSTX) a Strong Mutual Fund Pick Right Now?
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 DFA US Small Cap Institutional (DFSTX - Free Report) . DFSTX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify DFSTX 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
DFSTX finds itself in the Dimensional family, based out of Austin, TX. DFA US Small Cap Institutional made its debut in March of 1992, and since then, DFSTX has accumulated about $18.05 billion in assets, per the most up-to-date date available. The fund's current manager, Jed Fogdall, has been in charge of the fund since February of 2012.
Performance
Of course, investors look for strong performance in funds. DFSTX has a 5-year annualized total return of 7.1% and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 5.66%, which places it in the bottom 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. DFSTX's standard deviation over the past three years is 16.33% compared to the category average of 16.12%. Over the past 5 years, the standard deviation of the fund is 15.9% compared to the category average of 16.07%. This makes the fund less 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. In DFSTX's case, the fund lost 53.79% in the most recent bear market and underperformed its peer group by 1%. 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 1.13, so investors should note that it is hypothetically more 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. DFSTX has generated a negative alpha over the past five years of -5, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
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 largely on equities that are traded in the United States.
As of the last filing date, the mutual fund has 97.46% of its assets in stocks, with an average market capitalization of $2.40 billion. The fund has the heaviest exposure to the following market sectors:
- Other
- Finance
- Industrial Cyclical
- Technology
This fund's turnover is about 12%, so the fund managers are making fewer trades than comparable funds.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, DFSTX is a no load fund. It has an expense ratio of 0.37% compared to the category average of 1.10%. From a cost perspective, DFSTX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, DFA US Small Cap Institutional ( DFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, DFA US Small Cap Institutional ( DFSTX ) looks like a great potential choice for investors right now.
For additional information on the Small Cap Blend area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into DFSTX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.