Is Dreyfus Select Managers Small Cap Gr I (DSGIX) A Strong Mutual Fund Pick Right Now?

If you've been stuck searching for Small Cap Growth funds, consider Dreyfus Select Managers Small Cap Growth I DSGIX as a possibility. DSGIX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DSGIX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.

History of Fund/Manager

Dreyfus Premier is based in New York, NY, and is the manager of DSGIX. Dreyfus Select Managers Small Cap Growth I made its debut in July of 2010, and since then, DSGIX has accumulated about $11.03 million in assets, per the most up-to-date date available. The fund's current manager, a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 13.06%, and it sits in the bottom 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 8.82%, 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. DSGIX's standard deviation over the past three years is 14.05% compared to the category average of 9.98%. Over the past 5 years, the standard deviation of the fund is 14.22% compared to the category average of 13.81%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment.

Investors should note that the fund has a 5-year beta of 1.08, so it is likely going to be more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. DSGIX's 5-year performance has produced a negative alpha of -2.45, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 mostly on equities that are traded in the United States.

Right now, 99.89% of this mutual fund's holdings are stocks, with an average market capitalization of $2.81 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology
2. Health
3. Industrial Cyclical
4. Other
5. Services

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, DSGIX is a no load fund. It has an expense ratio of 1.01% compared to the category average of 1.36%. From a cost perspective, DSGIX is actually cheaper than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $100.

Bottom Line

Overall, Dreyfus Select Managers Small Cap Growth I DSGIX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

For additional information on the Small Cap Growth 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 DSGIX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.