Technology growth

Is Dreyfus Technology Growth A (DTGRX) a good mutual fund choice right now?

IIf you’ve been stuck looking for Sector – Tech funds, you might want to consider going through Dreyfus Technology Growth A (DTGRX). DTGRX carries a Zacks mutual fund ranking of 4 (sell), which is based on nine predictor factors such as size, cost and past performance.

Objective

DTGRX is part of the Sector – Tech category, which offers an array of different possible selections. With a much more diversified approach, Sector – Tech mutual funds offer investors a way to own a stake in a notoriously risky industry. Technology companies are present in various sectors such as semiconductors, software, internet and networking, among others.

Fund/manager history

BNY Mellon is based in New York, NY, and is the Director of DTGRX. Dreyfus Technology Growth A debuted in October 1997. Since then, DTGRX has accumulated assets of approximately $434.65 million, according to the most recent information available. The fund is currently managed by Erik A. Swords who has been in charge of the fund since December 2008.

Performance

Clearly, what investors are looking for in these funds is strong performance relative to their peers. DTGRX has a 5-year annualized total return of 25.82% and ranks in the top third among its peers in the category. If you’re interested in shorter timeframes, don’t discount the fund’s 3-year annualized total return of 23.43%, which puts it in the top third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 17.98%, the standard deviation of DTGRX over the past three years is 24.1%. The standard deviation of the fund over the last 5 years is 20.19% against a category average of 14.98%. This makes the fund more volatile than its peers over the past half-decade.

Risk factors

Investors should note that the fund has a 5-year beta of 1.11, so it is likely to be more volatile than the market as a whole. Since alpha represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, it is also worth paying attention to this measure. DTGRX has generated a positive alpha of 6.84 over the past five years, demonstrating that the managers of this portfolio are adept at selecting stocks that generate higher returns than the benchmark.

Assets

Examining the stock 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 whether there are any inherent biases in their approach. For this particular fund, the focus is largely on stocks that are traded in the United States.

Currently, 77.21% of this mutual fund’s holdings are in stocks, which have an average market capitalization of $335.91 billion. The fund has the highest exposure to the following market sectors:

  1. Technology
  2. Retail business

Expenses

For investors, it is essential to take a closer look at the cost parameters, as costs are increasingly important for mutual fund investments. 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, DTGRX is a load fund. It has an expense ratio of 1.16% compared to the category average of 1.35%. Cost-wise, DTGRX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and each subsequent investment must be $100.

Conclusion

Overall, Dreyfus Technology Growth A (DTGRX) has a low Zacks Mutual Fund ranking, and in conjunction with its relatively strong performance, worse downside risk, and lower fees, Dreyfus Technology Growth A (DTGRX) looks like a somewhat weak choice for investors right now.

For more information on this product, or to compare it to other industry-tech mutual funds, be sure to go to www.zacks.com/funds/mutual-funds for more information. If you also want to check out our stock reports, be sure to go to Zacks.com to see all the great tools we have to offer, including our proven Zacks Ranking.

Zacks’ Top Picks for Enjoying Artificial Intelligence

In 2021, this breakthrough technology is expected to generate $327.5 billion in revenue. Now, Shark Tank star and billionaire investor Mark Cuban claims that AI will create “the world’s first billionaires”. Zacks’ urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks with Extreme Upside Potential>>

Click to get this free report

Get Your Free (DTGRX): Fund Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.