Technology

Is Driehaus International Small Cap Growth (DRIOX) a Strong Mutual Fund Pick Right Now?

On the lookout for an All Cap Growth fund? Starting with Driehaus International Small Cap Growth (DRIOX) should not be a possibility at this time. DRIOX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DRIOX is part of the All Cap Growth category, which is a segment that boasts an array of other possible options. All Cap Growth mutual funds aim to invest in various equity securities, regardless of company size that exhibit growth characteristics. These portfolios have holdings across the cap levels-- small, medium and large-cap-- in order to increase diversification throughout the fund.

History of Fund/Manager

Driehaus is based in Chicago, IL, and is the manager of DRIOX. The Driehaus International Small Cap Growth made its debut in September of 2007 and DRIOX has managed to accumulate roughly $218.43 million in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 5.93%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.21%, which places it in the middle third during this time-frame.

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. Over the past three years, DRIOX's standard deviation comes in at 12.95%, compared to the category average of 12.2%. Looking at the past 5 years, the fund's standard deviation is 12.33% compared to the category average of 13.02%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In DRIOX's case, the fund lost 58.88% in the most recent bear market and underperformed its peer group by 0.42%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.78, so it is likely going to be less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a negative alpha of -2.67, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, DRIOX is a no load fund. It has an expense ratio of 1.49% compared to the category average of 1.20%. Looking at the fund from a cost perspective, DRIOX is actually more expensive than its peers.

While the minimum initial investment for the product is $10,000, investors should also note that each subsequent investment needs to be at least $2,000.

Bottom Line

Overall, Driehaus International Small Cap Growth ( DRIOX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and higher fees compared to its peers.

For additional information on this product, or to compare it to other mutual funds in the All Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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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.