Is Federated Kaufmann Small Cap C (FKCSX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Small Cap Growth funds, it would not be wise to start your search with Federated Kaufmann Small Cap C (FKCSX). FKCSX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Small Cap Growth funds is an area filled with options, such as FKCSX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.

History of Fund/Manager

FKCSX finds itself in the Federated family, based out of Pittsburgh, PA. Federated Kaufmann Small Cap C debuted in December of 2002. Since then, FKCSX has accumulated assets of about $105.16 million, according to the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. FKCSX has a 5-year annualized total return of -0.68%, and is in the bottom 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 8.93%, 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. Over the past three years, FKCSX's standard deviation comes in at 19.06%, compared to the category average of 12.7%. The fund's standard deviation over the past 5 years is 20.45% compared to the category average of 14.4%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.09, the fund is likely to be more volatile than 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. FKCSX has generated a negative alpha over the past five years of -12.02, demonstrating that 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, FKCSX is a no load fund. It has an expense ratio of 2.00% compared to the category average of 0.98%. FKCSX is actually more expensive than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $1,500, and each subsequent investment should be at least $100.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, Federated Kaufmann Small Cap C ( FKCSX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, Federated Kaufmann Small Cap C ( FKCSX ) looks like a somewhat weak choice for investors right now.

Want even more information about FKCSX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.

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