2 Solid Small-Value Fund Options
The category may be struggling so far this year, but there are still good choices for both conservative and more aggressive investors.
Andrew Daniels: After being the top-performing diversified U.S. stock category in 2016, the small-value category took a breather in 2017's first quarter, gaining just 0.3%. Meanwhile, the S&P 500 Index gained 6.1%.
Brent crude oil prices fell about 7% during the first quarter, so the energy sector dragged on the performance of many funds. The small-value category also has a heavy dosing of financials exposure, which posted relatively weak results during the quarter. On the flip side, the category is typically light in technology stocks, which have performed well this year.
Despite the recent struggles for small-value funds, there are still several solid options for investors to choose from. Gold-rated DFA US Small Cap Value offers a deeper value tilt than most peers at a low cost, making it an attractive option for risk-tolerant investors. For more conservative investors seeking small-cap exposure, check out Silver-rated Royce Special Equity, led by industry veteran Charlie Dreifus. The fund has historically provided very solid downside protection due to its quality focus and its close eye on valuations.
Andrew Daniels does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.