If investors are looking at the Mid Cap Growth fund category, AB Discovery Growth A (CHCLX Quick QuoteCHCLX - Free Report) could be a potential option. CHCLX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We note that CHCLX is a Mid Cap Growth fund, and this area is also loaded with many different options. Companies are usually considered growth stocks when they consistently report notable sales and/or earnings growth. Thus, Mid Cap Growth funds pick stocks--usually companies with a market cap between $2 billion and $10 billion--that demonstrate extensive growth opportunities for investors compared to their peers.

History of Fund/Manager

AllianceBernstein is responsible for CHCLX, and the company is based out of New York, NY. Since AB Discovery Growth A made its debut in July of 1938, CHCLX has garnered more than $593.72 million in assets. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.45%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -5.37%, 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 CHCLX over the past three years is 23.63% compared to the category average of 1%. The standard deviation of the fund over the past 5 years is 23.68% compared to the category average of 22%. 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 1.12, so it is likely going to be 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. CHCLX has generated a negative alpha over the past five years of -6.96, 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 principally on equities that are traded in the United States.

Currently, this mutual fund is holding 90.18% in stocks, which have an average market capitalization of $12.26 billion. The fund has the heaviest exposure to the following market sectors:

• Technology
• Industrial Cyclical
• Health

With turnover at about 66%, this fund makes more trades per year than the comparable 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, CHCLX is a load fund. It has an expense ratio of 0.93% compared to the category average of 42%. CHCLX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $50.

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

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and lower fees, AB Discovery Growth A ( CHCLX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.

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