If you have been looking for Small Cap Growth funds, it would not be wise to start your search with Brown Capital Management Small Company Investor (BCSIX Quick QuoteBCSIX - Free Report) . BCSIX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

BCSIX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.

History of Fund/Manager

BCSIX finds itself in the Brown Capital Management family, based out of Rocky Mount, NC. Brown Capital Management Small Company Investor debuted in July of 1992. Since then, BCSIX has accumulated assets of about $422.31 million, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 2.34%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -6.91%, 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. Over the past three years, BCSIX's standard deviation comes in at 22.8%, compared to the category average of 18.49%. The fund's standard deviation over the past 5 years is 23.32% compared to the category average of 19.65%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.02, the fund is likely to be as volatile as the market average. 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. With a negative alpha of -10.03, 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 principally on equities that are traded in the United States.

This fund is currently holding about 78.22% in stocks, which have an average market capitalization of $9.84 billion. The fund has the heaviest exposure to the following market sectors:

• Technology
• Health
• Other
• Industrial Cyclical

Turnover is 12%, which means, on average, the fund makes fewer trades than comparable funds.

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, BCSIX is a no load fund. It has an expense ratio of 1.31% compared to the category average of 1.06%. From a cost perspective, BCSIX is actually more expensive than its peers.

While the minimum initial investment for the product is $5,000, investors should also note that each subsequent investment needs to be at least $500.

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

Bottom Line

Overall, Brown Capital Management Small Company Investor ( BCSIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, this fund looks like a somewhat weak 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.