Having trouble finding a Small Cap Growth fund? Schwab Small-Cap Equity (SWSCX Quick QuoteSWSCX - Free Report) is a potential starting point. SWSCX bears a Zacks Mutual Fund Rank of 2 (Buy), 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 SWSCX. 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

SWSCX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. Schwab Small-Cap Equity made its debut in June of 2003, and since then, SWSCX has accumulated about $594 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 12.17%, and is in the top 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 5.42%, which places it in the top 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 SWSCX over the past three years is 22.19% compared to the category average of 21.48%. The standard deviation of the fund over the past 5 years is 23.61% compared to the category average of 23.94%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.14, the fund is likely to be more volatile than the market average. 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. Over the past 5 years, the fund has a negative alpha of -4.85. 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 largely on equities that are traded in the United States.

The mutual fund currently has 84.46% of its holdings in stocks, with an average market capitalization of $3.92 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Other
• Industrial Cyclical
• Health
• Technology

With turnover at about 106%, this fund makes more trades in a given year than the category average.

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, SWSCX is a no load fund. It has an expense ratio of 1.08% compared to the category average of 1.01%. Looking at the fund from a cost perspective, SWSCX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

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

Bottom Line

Overall, Schwab Small-Cap Equity ( SWSCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.