There are plenty of choices in the Small Cap Growth category, but where should you start your research? Well, one fund that you should consider investigating is Federated Kaufmann Small Cap C (FKCSX Quick QuoteFKCSX - Free Report) . FKCSX has a Zacks Mutual Fund Rank of 3 (Hold), 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 FKCSX. 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

Federated is based in Pittsburgh, PA, and is the manager of FKCSX. Since Federated Kaufmann Small Cap C made its debut in December of 2002, FKCSX has garnered more than $172.48 million in assets. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 4.37%, and it sits in the bottom 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 -7.48%, 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. The standard deviation of FKCSX over the past three years is 21.55% compared to the category average of 0%. The standard deviation of the fund over the past 5 years is 22.89% compared to the category average of 45%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.08, 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 negative alpha of -9.36. This means 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 primarily on equities that are traded in the United States.

The mutual fund currently has 75.51% of its holdings in stocks, which have an average market capitalization of $10.83 billion. The fund has the heaviest exposure to the following market sectors:

• Health
• Technology
• Non-Durable

This fund's turnover is about 40%, so the fund managers are making more trades in a given year than the category average.

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, FKCSX is a no load fund. It has an expense ratio of 1.99% compared to the category average of 41%. FKCSX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $1,500, investors should also note that each subsequent investment needs to be at least $100.

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

Bottom Line

Overall, Federated Kaufmann Small Cap C ( FKCSX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, this fund looks like a somewhat average 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. 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.