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Is Virtus KAR Small Cap Sustain Growth A (PSGAX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Small Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is Virtus KAR Small Cap Sustain Growth A (PSGAX - Free Report) . PSGAX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Small Cap Growth funds is an area filled with options, such as PSGAX. 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

Virtus Funds is based in Hartford, CT, and is the manager of PSGAX. Virtus KAR Small Cap Sustain Growth A debuted in June of 2006. Since then, PSGAX has accumulated assets of about $876.17 million, according to the most recently available information. The fund is currently managed by Todd Beiley who has been in charge of the fund since April of 2008.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 31.83%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 27.22%, 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. The standard deviation of PSGAX over the past three years is 20.47% compared to the category average of 17.61%. The fund's standard deviation over the past 5 years is 16.51% compared to the category average of 14.82%. 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 0.91, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. PSGAX has generated a positive alpha over the past five years of 15.52, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, PSGAX is a load fund. It has an expense ratio of 1.35% compared to the category average of 1.22%. Looking at the fund from a cost perspective, PSGAX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.

Bottom Line

Overall, Virtus KAR Small Cap Sustain Growth A ( PSGAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Virtus KAR Small Cap Sustain Growth A ( PSGAX ) 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. 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.


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