Small Cap Growth fund seekers should not consider taking a look at Alger Small Cap Focus A (AOFAX Quick QuoteAOFAX - Free Report) at this time. AOFAX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

AOFAX 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

Alger Funds is based in New York, NY, and is the manager of AOFAX. Alger Small Cap Focus A debuted in March of 2008. Since then, AOFAX has accumulated assets of about $462.46 million, according to the most recently available information. The fund is currently managed by Amy Zhang who has been in charge of the fund since February of 2015.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. AOFAX has a 5-year annualized total return of 20.08% and is 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 22.4%, which places it in the top 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. AOFAX's standard deviation over the past three years is 23.71% compared to the category average of 15.97%. Looking at the past 5 years, the fund's standard deviation is 20.53% compared to the category average of 13.7%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.07, the fund is likely to be more volatile than the market average. 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. Over the past 5 years, the fund has a positive alpha of 7.8. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, AOFAX is a load fund. It has an expense ratio of 1.29% compared to the category average of 1.22%. Looking at the fund from a cost perspective, AOFAX 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.

Bottom Line

Overall, Alger Small Cap Focus A ( AOFAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Alger Small Cap Focus A ( AOFAX ) looks like a poor potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.