There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that may not be worth investigating is Wasatch Core Growth Fund (WGROX). WGROX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes WGROX as Small Cap Blend, which is an area packed with options. Usually targeting stocks with market caps of less than $2 billion, a Small Cap Blend mutual fund lets investors diversify their funds among other kinds of small-cap equities. This can help reduce risk found in companies that have a lower stock market valuation.
History of Fund/Manager
Wasatch is based in Salt Lake City, UT, and is the manager of WGROX. The Wasatch Core Growth Fund made its debut in November of 1986 and WGROX has managed to accumulate roughly $1.57 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.94%, and is 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 18.81%, 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 11.26%, the standard deviation of WGROX over the past three years is 10.63%. Over the past 5 years, the standard deviation of the fund is 11.41% compared to the category average of 11.13%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In WGROX's case, the fund lost 55.09% in the most recent bear market and outperformed its peer group by 2.59%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 0.9, the fund is likely to be less volatile than the market average. 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. The fund has produced a positive alpha over the past 5 years of 1.55, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, WGROX is a no load fund. It has an expense ratio of 1.19% compared to the category average of 1.10%. WGROX is actually more expensive than its peers when you consider factors like cost.
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 Core Growth Fund ( WGROX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Wasatch Core Growth Fund ( WGROX ) looks like a poor potential choice for investors right now.
This could just be the start of your research on WGROXin the Small Cap Blend 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 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.
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