For those seeking a Small Cap Growth fund category, the Fidelity Small Cap Discovery Fund (FSCRX) emerges as a contender worth considering. With a Zacks Mutual Fund Rank of 3 (Hold), this ranking takes into account various forecasting elements like size, cost, and historical performance.
Exploring the Objective
FSCRX falls under the Small Cap Growth category, a realm teeming with several other potential alternatives. Small Cap Growth mutual funds typically concentrate their portfolios on stocks presenting significant growth prospects with a market cap under $2 billion. These portfolios often showcase budding companies in emerging industries and markets.
Delving Into the Fund Manager’s History
Based in Boston, MA, Fidelity oversees the operations of FSCRX. The Fidelity Small Cap Discovery Fund debuted in January of 2001 and has managed to amass roughly $2.73 billion in assets, as per the most recent available information. Derek Janssen has been steering the fund’s course as the manager since March of 2016.
Examining Performance
Of paramount importance to investors is the fund’s performance relative to its peers. In this case, the fund has yielded a 5-year annualized total return of 11.06%, positioning it in the top third of its category peers. Furthermore, a glance at its 3-year annualized total return of 8.89% places it in the upper echelon during this timeframe.
It is imperative to bear in mind that the returns of the product may not encompass all expenses, with any unreflected fees serving to diminish the returns. Total returns also fail to encapsulate the fund’s sales charge impact. Inclusion of sales charges would have reduced the total returns.
Analyzing a fund’s performance also entails considering the standard deviation of the returns. A lower standard deviation signifies reduced volatility experienced by the fund. Over the past three years, FSCRX’s standard deviation stands at 20.05%, comparing to the category average of 20.58%. In the last five years, the fund’s standard deviation amounts to 24.52% in contrast to the category average of 23.48%, rendering the fund more volatile than its peers over the past half-decade.
Evaluating Risk Factors
Sporting a 5-year beta of 1.21, the fund is prone to exhibit greater volatility than the market average. Alpha serves as an additional metric worthy of consideration, measuring a portfolio’s performance on a risk-adjusted basis relative to a benchmark, with the S&P 500 serving as the benchmark in this context. FSCRX has demonstrated a negative alpha over the past five years at -4.57, indicating the portfolio managers’ struggle to select securities that yield returns surpassing the benchmark.
Analyzing Holdings
Scrutinizing the equity holdings of a mutual fund offers valuable insight. This aspect unveils how the manager applies their stated methodology and whether any inherent biases pervade their approach. In the case of this fund, the primary focus centers on equities traded in the United States.
Currently, this fund allocates approximately 77.83% in stocks, boasting an average market capitalization of $4.64 billion. The fund displays significant exposure to the industrial cyclical, retail trade, finance, and services market sectors.
- Industrial Cyclical
- Retail Trade
- Finance
- Services
The fund’s turnover hovers around 27%, indicating that the fund managers execute fewer trades compared to their similar counterparts.
Assessing Expenses
Amid escalating competition in the mutual fund sphere, costs have assumed heightened importance in investment decisions. Logically, a lower-cost product will outshine its identical counterpart, thereby warranting a detailed examination of these metrics by investors. In terms of fees, FSCRX qualifies as a no-load fund, boasting an expense ratio of 1.12% against the category average of 1.01%. From a cost angle, FSCRX stands as a relatively pricier option compared to its counterparts.
Investors should note that with this product, the minimum initial investment required is $0, with subsequent investments bearing no minimum amount.
Fees levied by investment advisors have not factored into consideration, indicating potentially reduced returns if these were included.
In Conclusion
In totality, despite its commendable performance, moderate downside risk, and higher fees, the Fidelity Small Cap Discovery Fund (FSCRX) secures a neutral Zacks Mutual Fund rank, thus presenting as a middling choice for investors at current juncture.
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