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Revisiting an Old Friend (DISSX)

Date: 7/1/2017

Author: Ted Black, CFP®

This article revisits the Dreyfus SmallCap Index Fund (DISSX), a no-load index mutual fund we spotlighted some years ago in the Fall 2013 issue of Success InSight®. In addition to profiling the fund in that issue, we noted that diversification of one’s investment assets can be an effective tool, and that there are potential long-term benefits associated with carefully selecting an appropriate (for your situation) mix of mutual funds from distinctly different categories. More on this in just a bit; but first let’s quickly review the fund.

The Dreyfus SmallCap Index Fund (DISSX) is a no-load fund that is designed to closely track the S&P SmallCap 600 Index®. Advantages of using an index fund can include lower than average expense ratios and lower taxable distributions as compared to the average “actively managed” fund. As the underlying index’s name suggests, there are 600 stock holdings in this fund. Companies included in the index generally have market capitalizations ranging from around $300 million to $1.4 billion +/-. The largest holdings of the fund come from within the Industrial, Technology and Financial Services industries. The lead manager, Thomas J. Durante, has been at the helm since March of 2000.

Based on their strong past performance and promising long-term outlook, when appropriately allocated, U.S. based Small Capitalization Stocks can often be a core, long-term holding for many investors. What I mean by “core” is that this is a holding that you may own in your portfolio indefinitely. And this leads me to why I wanted to revisit this fund.

As compared to LargeCap indexes like the Dow Jones Industrial Average® and the S&P 500®, SmallCap stocks are noticeably underperforming through the first half of 2017. A survey of different investors and/or advisors will almost certainly elicit different and sometimes opposing conclusions from this. Nonetheless, I believe that it’s not unreasonable to suggest that if you feel that SmallCap stocks can play a viable long-term role in your portfolio, then establishing or adding to your position during periods of underperformance can be a prudent decision. Buy when the price is high, going higher, and everyone’s jumping on the bandwagon … or act when it’s out of favor and pickup high quality holdings at more reasonable prices?

Your diversification strategy will almost certainly have more impact on your long-term performance than any other item. A high quality, low cost U.S. SmallCap fund can be a solid addition to many portfolios. If you’d like to discuss this further, or would like a portfolio review to determine if this fund might be appropriate for your portfolio, please call Ted Black, CFP® at 888-878-0001, extension 3.

Performance annualized and updated through 06/30/2017:
1-Year: +21.68%; 3-Year: +8.80%; 5-Year:+14.98%.
The gross annual expense ratio is 0.50%.

Statistics and information provided by Morningstar and Dreyfus Investments. Please visit the Dreyfus website at www.dreyfus.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds are not FDIC insured.

If you questions about how your current situation might be affected by recent events, please feel free to call Ted Black, CFP® at 888-878-0001, extension 3.

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