With Athey scheduled to depart in the middle of 2014, it seems like a good time to examine this fund.
It's been a good, relatively conservative fund, and a good way to get exposure to very small companies without going to a dedicated microcap fund. On the other hand, it has gotten very large in assets (its 5% turnover ratio mitigating this), and over the years has slid more and more toward growth. Not the fund it started out as.
Would TRP Small Cap Stock (OTCFX) make sense as an alternative? Like PRSVX, that fund has also been sliding toward growth (though it has always been a slight bit more growth oriented), and it is equally bloated. With a somewhat higher market cap, it provides a bit less exposure to very small companies. And its volatility (std deviation), while recently comparable to PRSVX, has generally been higher. On the other hand, it has performed very well, and is not changing managers.
Other alternatives are staying with the fund (TRP has traditionally been very good at transitioning managers), or looking for other small cap value/blend funds. Not easy to find ones with similar profiles - really small cap, low cost, low turnover, moderate risk, reasonable (or better) performance.
A couple that turned up on a quick screen (don't know much about these) include:
Brown Advisory Small-Cap Fundamental Value (BIAUX)
Glenmede Small Cap Equity (GTCSX, GTSCX)
Queens Road SCV (QRSVX)
Comments
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/small-value
- If one bought in for the relative short term (by that I mean, say, under 8 years or so), then one bought a blend, trending toward growth fund. In that case, might it make sense to swap it for OTCFX - a sibling fund that has been trending similarly, in the same niche (addressing Max's issue), with (probably) the same analysts, better performance, and not changing managers?
- If one invested long ago (for a value or value-leaning small cap fund), is this a good time (given the upcoming management change) to give up the ghost and look for real "value", or might the new manager nudge the fund back toward value?
I'm inclined to doubt the latter, given that TRP really doesn't have anything open in the small, or even mid cap, value space - PRSVX is actually slightly growth leaning now, TRMCX is closed. Their other funds with portfolios that M* classifies as value are all large cap: Equity Income (PRFDX) and Value (TRVLX). Most of TRP's funds tend to be growthy.
- If one is looking for something value-leaning, but not strictly value (i.e. what PRSVX had been for several years until a couple of years ago), might it be better to ply the small cap blend funds (addressing Ted's list of SCV funds)? That's where one finds PRSVX listed by US News now.
Note that #2 on that list is Glenmede - one of the funds I suggested as an alternative. #1 is Homestead Small Co (HSCSX), which seems to have been a great fund "forever", with extremely low (1%) turnover and modest cost (1%). I missed it because I was doing a quick search for funds with a bigger portion of very small companies. In fairness, Homestead's average market cap, at $1.65B, is still smaller than OTCFX's, which I also suggested as an alternative.
Finally, the fact that lots of DFA funds appear on both US News lists (small cap value, small cap blend) begs the question: would these funds still rank as highly if the total cost of ownership (including advisor fees required to gain access to these funds) were included? M* incorporates the effect of front end loads when computing star ratings, but it does not incorporate the advisory (and transaction) fees necessary to purchase DFA funds. How much of a difference would that make?