Is Fidelity Small Cap Growth (FCPGX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Small Cap Growth fund? Fidelity Small Cap Growth (FCPGX) is a potential starting point. FCPGX possesses a Zacks Mutual Fund Rank of 2 (Buy), 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 FCPGX. 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

Fidelity is based in Boston, MA, and is the manager of FCPGX. The Fidelity Small Cap Growth made its debut in November of 2004 and FCPGX has managed to accumulate roughly $3.39 billion in assets, as of the most recently available information. The fund is currently managed by Patrick Venanzi who has been in charge of the fund since November of 2011.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 7.78%, 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 18.45%, which places it in the top 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, FCPGX's standard deviation comes in at 19.62%, compared to the category average of 12.42%. Over the past 5 years, the standard deviation of the fund is 20.65% compared to the category average of 14.14%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. FCPGX has a 5-year beta of 1.15, which means it is likely to be more 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. FCPGX's 5-year performance has produced a negative alpha of -4.95, which means 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 84.62% in stocks, with an average market capitalization of $11.94 billion. The fund has the heaviest exposure to the following market sectors:

• Technology
• Health
• Industrial Cyclical
• Other

This fund's turnover is about 89%, so the fund managers are making fewer trades than its comparable peers.

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, FCPGX is a no load fund. It has an expense ratio of 0.84% compared to the category average of 0.97%. FCPGX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

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

Bottom Line

Overall, Fidelity Small Cap Growth ( FCPGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Your research on the Small Cap Growth 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. 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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This article originally published on Zacks Investment Research (zacks.com).

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