3 / 5 Stars
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Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#48 in Mid-Cap Blend
U.S. News evaluated 140 Mid-Cap Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 26.75 percent over the past year, 14.46 percent over the past three years, 27.25 percent over the past five years, and 10.23 percent over the past decade.
|Trailing Returns||Updated 01.31.2014|
|Year to date||-1.8%|
|3 Years (Annualized)||14.5%|
|5 Years (Annualized)||27.2%|
|10 Years (Annualized)||10.2%|
While it has a short-term focus, the Dreyfus Opportunistic Midcap Value fund asks to be judged by its long-term results.
As of February 05, 2014, the fund has assets totaling almost $2.41 billion invested in 69 different holdings. Its portfolio consists of between 50 and 100 mostly U.S. stocks of mid-size companies.
Like the fabled lawyer who chases ambulances in search of a job, this fund looks for opportunity caused by turmoil. The managers hold their cash, lying in wait to buy shares of faltering companies whose quick recoveries they believe they can profit from. “We buy stocks at a substantial discount to their long-run intrinsic valuation where we believe that fundamentals are generally stabilizing,” says lead manager David Daglio. His aim is to sell once a stock rebounds to its fair value, judging from what he estimates will be its average earnings during an economic cycle. In 2009 and 2010, for instance, he noticed that the automotive sector, and especially the parts manufacturers, were vastly underproducing compared with current demand and realized that they would have to drastically increase production eventually. The fund added positions in several parts manufacturers and has continued to benefit from their return to more normal production forecasts. Toward the end of 2010, the fund increased positions in several media companies, such as News Corp. and Interpublic Group. The fund has returned 26.75 percent over the past year and 14.46 percent over the past three years.
It’s been more than 15 years since its founding, and the fund has one of the best track records in its category. It also has a tendency to beat the competition when pulling out of a market slump. In both 2003 and 2009, the fund trounced its peers. The fund has returned 27.25 percent over the past five years and 10.23 percent over the past decade.
Lead manager David Daglio uses fundamentals like low price-to-earnings ratios coupled with the prospect of new or renewed earnings growth to find investment opportunitieshe he can trade for short-term gains. Management tends to buy companies it believes will bounce back within three to four quarters. It does this by finding prospects that are experiencing lower-than-usual cash flow and earnings that are the result of a temporary event. Management’s contrarian views sometimes cause it to lag mid-cap indices in the short-term, but its long-term returns are substantial.
Role in Portfolio
Morningstar calls this fund a supporting player.
David Daglio has run the fund since 2003. Co-manager Mark Dishop left the fund in 2010. Seven other analysts help run this portfolio, as well as the Small Cap Opportunistic fund.
Dreyfus Opportunistic Midcap Value Fund has an expense ratio of 1.18 percent.
Its 80-odd holdings, as of November 30, distribute risk well between sectors and industries. The main risk is if the mid-cap equity market as a whole slows down compared with other asset classes.