Markets

Is Westcore Small Cap Growth II Retail (WTSLX) a Strong Mutual Fund Pick Right Now?

A generic image of a stock chart
Credit: Shutterstock photo

Mid Cap Growth fund seekers should consider taking a look at Westcore Small Cap Growth II Retail (WTSLX). WTSLX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

WTSLX is part of the Mid Cap Growth section, a segment that boasts a wide array of possible selections. While Mid Cap Growth mutual funds choose companies with a stock market valuation between $2 billion and $10 billion, stocks in these funds are also expected to show broad considerable growth opportunities for investors compared to their peers. To be considered a growth stock, companies must consistently report impressive sales and/or earnings growth.

History of Fund/Manager

Segal Bryant is based in Chicago, IL, and is the manager of WTSLX. Since Westcore Small Cap Growth II Retail made its debut in October of 1999, WTSLX has garnered more than $69.33 million in assets. 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 5.59%, and it sits in the bottom third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 10.48%, which places it in the bottom 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. WTSLX's standard deviation over the past three years is 15.04% compared to the category average of 14.86%. Over the past 5 years, the standard deviation of the fund is 14.95% compared to the category average of 14.71%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. WTSLX lost 50.24% in the most recent bear market and outperformed its peer group by 2.79%. This could mean that the fund is a better choice than comparable funds during a bear market.

Investors should note that the fund has a 5-year beta of 1.13, so it is likely going to be more volatile than the market at large. 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. WTSLX has generated a negative alpha over the past five years of -5.69, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 largely on equities that are traded in the United States.

This fund is currently holding about 94.86% stock in stocks, which have an average market capitalization of $4.05 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other
  3. Health
  4. Services
  5. Industrial Cyclical
  6. Non-Durable

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, WTSLX is a no load fund. It has an expense ratio of 0.97% compared to the category average of 1.29%. WTSLX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $250,000, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Westcore Small Cap Growth II Retail ( WTSLX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

This could just be the start of your research on WTSLXin the Mid Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (WTSLX): Fund Analysis Report

To read this article on Zacks.com click here.

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


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

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More