There are plenty of choices in the Non US - Equity category, but where should you start your research? Well, one fund that may not be worth investigating is DFA Emerging Markets Core Equity I (DFCEX). DFCEX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
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. The DFA Emerging Markets Core Equity I made its debut in May of 2005 and DFCEX has managed to accumulate roughly $25.37 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
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 3.57%, and is 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 9.66%, 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. DFCEX's standard deviation over the past three years is 13.3% compared to the category average of 12.2%. Over the past 5 years, the standard deviation of the fund is 14.78% compared to the category average of 13.02%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In DFCEX's case, the fund lost 61.22% in the most recent bear market and underperformed comparable funds by 2.76%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 0.8, the fund is likely to be less 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. With a negative alpha of -4.83, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, DFCEX is a no load fund. It has an expense ratio of 0.52% compared to the category average of 1.20%. DFCEX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Overall, DFA Emerging Markets Core Equity I ( DFCEX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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