Having trouble finding a Large Cap Value fund? DFA US Large Cap Value III (DFUVX) is a potential starting point. DFUVX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
DFUVX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds’high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.
History of Fund/Manager
DFUVX finds itself in the Dimensional family, based out of Austin, TX. DFA US Large Cap Value III made its debut in February of 1995, and since then, DFUVX has accumulated about $3.30 billion in assets, per the most up-to-date date available. The fund is currently managed by Jed S. Fogdall who has been in charge of the fund since February of 2012.
Investors naturally seek funds with strong performance. DFUVX has a 5-year annualized total return of 12.71% and it sits in the middle 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 10.86%, 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. Compared to the category average of 20.39%, the standard deviation of DFUVX over the past three years is 23.24%. The standard deviation of the fund over the past 5 years is 18.79% compared to the category average of 16.6%. This makes the fund more volatile than its peers over the past half-decade.
With a 5-year beta of 1.16, 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. DFUVX’s 5-year performance has produced a negative alpha of -6.23, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Investigating 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 primarily on equities that are traded in the United States.
Currently, this mutual fund is holding 93.2% stock in stocks and it has a negligible amount of assets in foreign securities. With turnover at about 0%, this fund makes fewer trades than comparable funds.
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, DFUVX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 1%. DFUVX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Overall, DFA US Large Cap Value III ( DFUVX ) 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.
Your research on the Large Cap Value segment doesn’t have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.