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

·3 min read

If you're looking for a Europe - Equity fund category, then a potential option is DFA Continental Small Company I (DFCSX). DFCSX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DFCSX is part of the Europe - Equity section, a segment that boasts an array of many different selections. Europe - Equity mutual funds are known for investing their assets in stocks based in countries like Great Britain, Germany, France, Italy, and Spain; these funds provide slow growth that can offer great 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 $537.74 million in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 14.19%, 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 10.93%, 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. DFCSX's standard deviation over the past three years is 24.15% compared to the category average of 20.32%. The fund's standard deviation over the past 5 years is 19.97% compared to the category average of 17.13%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.13, the fund is likely to be more volatile than the market average. 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 negative alpha over the past 5 years of -4.19, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, DFCSX is a no load fund. It has an expense ratio of 0.54% compared to the category average of 1.36%. 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 ( DFCSX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on the Europe - Equity 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 DFCSX 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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