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2 Solid Small-Value Fund Options

2 Solid Small-Value Fund Options

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.

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About the Author

Andrew Daniels

Associate Director
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Andrew Daniels, CFA, CAIA, is associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He helps oversee Morningstar’s U.S.-based equity strategies team and is responsible for qualitative research on prominent equity strategies, including those offered by Harris Associates and Artisan Partners.

From 2018-21, Daniels was based in Morningstar’s Hong Kong office, conducting qualitative research on global emerging-markets and Asia-Pacific equity strategies, in addition to helping on the delivery of manager research services in the region.

Before joining Morningstar in 2015, Daniels worked in corporate finance for Caterpillar and in portfolio management for Evanston Advisors.

Daniels holds bachelor's degrees in finance, economics, and marketing from the University of Iowa, where he graduated with distinction. He also earned a Master of Business Administration from the University of Chicago Booth School of Business. Daniels holds the Chartered Financial Analyst® designation and the Chartered Alternative Investment Analyst® designation. He is also a Certified Management Accountant.

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