Is Wasatch Micro Cap Fund (WMICX) 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 Wasatch Micro Cap Fund (WMICX). WMICX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
WMICX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.
History of Fund/Manager
Wasatch is responsible for WMICX, and the company is based out of Salt Lake City, UT. Wasatch Micro Cap Fund debuted in June of 1995. Since then, WMICX has accumulated assets of about $539.35 million, according to the most recently available information. The fund is currently managed by Kenneth Korngiebel who has been in charge of the fund since July of 2017.
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 8.27%, and is 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 -11.39%, 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. The standard deviation of WMICX over the past three years is 23.78% compared to the category average of 18.04%. The standard deviation of the fund over the past 5 years is 27.12% compared to the category average of 19.49%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.21, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. WMICX has generated a negative alpha over the past five years of -4.97, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
Right now, 84.22% of this mutual fund's holdings are stocks, with an average market capitalization of $1.66 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Industrial Cyclical
Health
Turnover is 57%, which means this fund makes fewer trades than the average comparable fund.
Expenses
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 1.66% compared to the category average of 1.07%. Looking at the fund from a cost perspective, WMICX is actually more expensive than its peers.
This fund requires a minimum initial investment of $2,000, and each subsequent investment should be at least $100.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Wasatch Micro Cap Fund ( WMICX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Wasatch Micro Cap Fund ( WMICX ) looks like a poor potential choice for investors right now.
Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare WMICX to its peers 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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