If you have been looking for Small Cap Growth funds, it would not be wise to start your search with Wasatch Micro Cap Fund (WMICX). WMICX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
WMICX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.
History of Fund/Manager
Wasatch is based in Salt Lake City, UT, and is the manager of WMICX. Since Wasatch Micro Cap Fund made its debut in June of 1995, WMICX has garnered more than $575.76 million in assets. Kenneth Korngiebel is the fund's current manager and has held that role since July of 2017.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 10.28%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -6.92%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. WMICX's standard deviation over the past three years is 24.27% compared to the category average of 18.11%. Over the past 5 years, the standard deviation of the fund is 27.28% compared to the category average of 19.48%. 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 1.24, which means it is hypothetically more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. WMICX's 5-year performance has produced a negative alpha of -5.44, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating the equity 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 if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.
Currently, this mutual fund is holding 85.47% in stocks, and these companies have an average market capitalization of $1.62 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Health
- Industrial Cyclical
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, WMICX is a no load fund. It has an expense ratio of 1.67% compared to the category average of 1.07%. So, WMICX is actually more expensive than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $2,000; each subsequent investment needs to be at least $100.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Wasatch Micro Cap Fund ( WMICX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and higher fees, Wasatch Micro Cap Fund ( WMICX ) looks like a poor potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
