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Is Virtus KAR Small-Cap Growth I (PXSGX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Small Cap Growth funds, you might want to consider passing on by Virtus KAR Small-Cap Growth I (PXSGX - Free Report) as a possibility. PXSGX holds a Zacks Mutual Fund Rank of 4 (Sell), 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 PXSGX. 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

Virtus Funds is based in Hartford, CT, and is the manager of PXSGX. Virtus KAR Small-Cap Growth I made its debut in June of 2006, and since then, PXSGX has accumulated about $1.79 billion in assets, per the most up-to-date date available. The fund is currently managed by Todd Beiley who has been in charge of the fund since April of 2008.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. PXSGX has a 5-year annualized total return of 5.95% 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 -0.28%, 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. PXSGX's standard deviation over the past three years is 22.42% compared to the category average of 16.06%. Looking at the past 5 years, the fund's standard deviation is 22.65% compared to the category average of 17.59%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.01, so investors should note that it is hypothetically as volatile as 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. PXSGX's 5-year performance has produced a negative alpha of -8.7, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, PXSGX is a no load fund. It has an expense ratio of 1.11% compared to the category average of 1.01%. So, PXSGX is actually more expensive than its peers from a cost perspective.

This fund requires a minimum initial investment of $100,000, while there is no minimum for each subsequent investment.

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

Bottom Line

Overall, Virtus KAR Small-Cap Growth I ( PXSGX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, Virtus KAR Small-Cap Growth I ( PXSGX ) looks like a somewhat weak choice for investors right now.

Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare PXSGX to its peers as well 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.


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