Is JPMorgan Dynamic Small Cap Growth A (VSCOX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Small Cap Growth funds, a place to start could be JPMorgan Dynamic Small Cap Growth A (VSCOX). VSCOX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

– Zacks

Objective

VSCOX 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

J.P. Morgan is responsible for VSCOX, and the company is based out of Boston, MA. The JPMorgan Dynamic Small Cap Growth A made its debut in May of 1997 and VSCOX has managed to accumulate roughly $279.82 million in assets, as of the most recently available information. The fund is currently managed by Eytan Shapiro who has been in charge of the fund since September of 2004.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 20.49%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 14.43%, 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. The standard deviation of VSCOX over the past three years is 23.97% compared to the category average of 17.7%. Over the past 5 years, the standard deviation of the fund is 19.55% compared to the category average of 14.51%. 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 1.16, 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. VSCOX has generated a positive alpha over the past five years of 0.84, demonstrating that managers in this portfolio are skilled in picking 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 mostly on equities that are traded in the United States.

This fund is currently holding about 77.28% stock in stocks, with an average market capitalization of $4.55 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Industrial Cyclical
  3. Technology
  4. Other
  5. Health

With turnover at about 96%, this fund is making more trades per year than the comparable average.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VSCOX is a load fund. It has an expense ratio of 1.23% compared to the category average of 1.21%. So, VSCOX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, JPMorgan Dynamic Small Cap Growth A ( VSCOX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and higher fees, JPMorgan Dynamic Small Cap Growth A ( VSCOX ) 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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