Is BlackRock Advantage Small Cap Core A (BDSAX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is BlackRock Advantage Small Cap Core A (BDSAX). BDSAX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
BDSAX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
BlackRock is based in New York, NY, and is the manager of BDSAX. Since BlackRock Advantage Small Cap Core A made its debut in June of 2013, BDSAX has garnered more than $595.75 million in assets. A team of investment professionals is the fund’s current manager.
Of course, investors look for strong performance in funds. BDSAX has a 5-year annualized total return of 9.5% and is in the middle 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 2.15%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. Over the past three years, BDSAX’s standard deviation comes in at 22.16%, compared to the category average of 15.99%. The fund’s standard deviation over the past 5 years is 24.26% compared to the category average of 17.19%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 1.16, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. BDSAX’s 5-year performance has produced a negative alpha of -6.52, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 89.38% of its assets in stocks, with an average market capitalization of $5.04 billion. The fund has the heaviest exposure to the following market sectors:
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Industrial Cyclical
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Technology
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Finance
Turnover is about 75%, so those in charge of the fund make more trades in a given year than the category average.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, BDSAX is a load fund. It has an expense ratio of 0.75% compared to the category average of 0.97%. From a cost perspective, BDSAX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Overall, BlackRock Advantage Small Cap Core A ( BDSAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, this fund looks like a great potential choice for investors right now.
For additional information on the Small Cap Blend 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 BDSAX 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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