Mutual Fund Equity Report fund seekers should not consider taking a look at USAA Small Cap Stock Fund (USCAX Quick QuoteUSCAX - Free Report) at this time. USCAX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

USCAX finds itself in the Victory family, based out of Columbus, OH. USAA Small Cap Stock Fund made its debut in August of 1999, and since then, USCAX has accumulated about $795.13 million in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.07%, 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 23.04%, 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 USCAX over the past three years is 24.42% compared to the category average of 19.9%. The fund's standard deviation over the past 5 years is 21.28% compared to the category average of 16.62%. 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 1.2, which means it is hypothetically 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. USCAX has generated a negative alpha over the past five years of -6.89, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

As of the last filing date, the mutual fund has 81.78% of its assets in stocks, and these companies have an average market capitalization of $4.28 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology
2. Finance
3. Industrial Cyclical

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, USCAX is a no load fund. It has an expense ratio of 1.10% compared to the category average of 1.10%. USCAX is actually on par with its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $50.

Bottom Line

Overall, USAA Small Cap Stock Fund ( USCAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and on par fees, USAA Small Cap Stock Fund ( USCAX ) looks like a somewhat weak choice for investors right now.

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