There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Wasatch Micro Cap Fund (WMICX). WMICX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
We classify WMICX in the Small Cap Blend category, an area rife with potential choices. Small Cap Blend mutual funds usually target companies with a market capitalization of less than $2 billion. A small-cap blend mutual fund allows investors to diversify their funds among various types of small-cap stocks, which can help reduce the volatility inherent in lower market cap companies.
History of Fund/Manager
Wasatch is responsible for WMICX, and the company is based out of Salt Lake City, UT. Since Wasatch Micro Cap Fund made its debut in June of 1995, WMICX has garnered more than $433.04 million in assets. The fund's current manager, Daniel Chace, has been in charge of the fund since January of 2004.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. WMICX has a 5-year annualized total return of 11.89% and it sits in the top 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 19.77%, which places it in the top 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. Compared to the category average of 14.86%, the standard deviation of WMICX over the past three years is 15.9%. Looking at the past 5 years, the fund's standard deviation is 15.62% compared to the category average of 14.71%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In WMICX's case, the fund lost 60.76% in the most recent bear market and underperformed its peer group by 7.73%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. WMICX has a 5-year beta of 1.01, which means it is likely to be as volatile as the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a positive alpha of 1.18. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. 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, WMICX is a no load fund. It has an expense ratio of 1.65% compared to the category average of 1.29%. Looking at the fund from a cost perspective, WMICX is actually more expensive than its peers.
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.
Overall, Wasatch Micro Cap Fund ( WMICX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a good potential choice for investors right now.
Your research on the Small Cap Blend segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.