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Is Fidelity Small Cap Value (FCPVX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Small Cap Value fund? Starting with Fidelity Small Cap Value (FCPVX - Free Report) is one possibility. FCPVX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes FCPVX as Small Cap Value, which is a segment packed with options. Known for investing in companies with market caps under $2 billion, Small Cap Value mutual funds represent good value because of many things; stocks in these funds offer low P/E ratios, high dividend yields, and better-than-average P/S ratios.

History of Fund/Manager

FCPVX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Small Cap Value made its debut in November of 2004 and FCPVX has managed to accumulate roughly $1.35 billion in assets, as of the most recently available information. The fund's current manager, Derek Janssen, has been in charge of the fund since January of 2013.

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 3.62%, 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 0.31%, which places it in the middle 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 FCPVX over the past three years is 15.09% compared to the category average of 11.47%. The fund's standard deviation over the past 5 years is 13.64% compared to the category average of 11.23%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FCPVX lost 49.99% in the most recent bear market and outperformed its peer group by 1%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.95, which means it is hypothetically less 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. The fund has produced a negative alpha over the past 5 years of -4.6, 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 93.42% stock in stocks, and these companies have an average market capitalization of $3.43 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Industrial Cyclical
With turnover at about 79%, this fund makes more trades in a given year than the category average.

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, FCPVX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1.29%. FCPVX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity Small Cap Value ( FCPVX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Small Cap Value ( FCPVX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Value, make sure to go to www.zacks.com/funds/mutual-funds 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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