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

Looking for a Small Cap Growth fund? You may want to consider Dreyfus Select Managers Small Cap Growth I (DSGIX) as a possible option. DSGIX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DSGIX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.

History of Fund/Manager

DSGIX is a part of the Dreyfus Premier (NASDAQ:PINC) family of funds, a company based out of New York, NY. Since Dreyfus Select Managers Small Cap Growth I made its debut in July of 2010, DSGIX has garnered more than $8.01 million in assets. The fund is currently managed by a team of investment professionals.

Performance

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 2.23%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.24%, 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. DSGIX's standard deviation over the past three years is 19.53% compared to the category average of 11.81%. Looking at the past 5 years, the fund's standard deviation is 18.07% compared to the category average of 11.6%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.

Even still, the fund has a 5-year beta of 1.14, so investors should note that it is hypothetically more volatile than the market at large. 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. The fund has produced a negative alpha over the past 5 years of -4.4, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

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 mostly on equities that are traded in the United States.

The mutual fund currently has 82.03% of its holdings in stocks, which have an average market capitalization of $3.82 billion. The fund has the heaviest exposure to the following market sectors:

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

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, DSGIX is a no load fund. It has an expense ratio of 1.01% compared to the category average of 1.23%. So, DSGIX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, Dreyfus Select Managers Small Cap Growth I ( DSGIX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on DSGIXin the Small Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.