Back to top

Image: Bigstock

Is ClearBridge Small Cap Growth A (SASMX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Small Cap Growth fund seekers should consider taking a look at ClearBridge Small Cap Growth A (SASMX - Free Report) . SASMX 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 SASMX. 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

SASMX is a part of the Franklin family of funds, a company based out of San Mateo, CA. Since ClearBridge Small Cap Growth A made its debut in August of 1999, SASMX has garnered more than $762 million in assets. The fund is currently managed by Jeffrey J. Russell who has been in charge of the fund since March of 2007.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 6.62%, and it sits 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 -6.35%, 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. Compared to the category average of 15.33%, the standard deviation of SASMX over the past three years is 22.96%. The fund's standard deviation over the past 5 years is 24.45% compared to the category average of 16.4%. 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, so it is likely going to be more volatile than the market at large. 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. The fund has produced a negative alpha over the past 5 years of -8, which shows that 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 mostly on equities that are traded in the United States.

Currently, this mutual fund is holding 91.49% in stocks, and these companies have an average market capitalization of $5.27 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Industrial Cyclical
  • Retail Trade
This fund's turnover is about 13%, so the fund managers are making 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, SASMX is a load fund. It has an expense ratio of 1.18% compared to the category average of 0.99%. Looking at the fund from a cost perspective, SASMX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50

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

Bottom Line

Overall, even with its comparatively weak performance, worse downside risk, and higher fees, ClearBridge Small Cap Growth A ( SASMX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.

For additional information on the Small Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into SASMX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ClearBridge Small Cap Growth A (SASMX) - free report >>

Published in