There are plenty of choices in the Small Cap Growth category, but where should you start your research? Well, one fund that may not be worth investigating is Fidelity Small Cap Discovery Fund (FSCRX Quick QuoteFSCRX - Free Report) . FSCRX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

FSCRX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.

History of Fund/Manager

Fidelity is responsible for FSCRX, and the company is based out of Boston, MA. Fidelity Small Cap Discovery Fund made its debut in January of 2001, and since then, FSCRX has accumulated about $2.14 billion in assets, per the most up-to-date date available. Forrest St. Clair is the fund's current manager and has held that role since March of 2023.

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 11.48%, and it sits in the middle 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 2.64%, 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. Compared to the category average of 21.48%, the standard deviation of FSCRX over the past three years is 21.6%. Over the past 5 years, the standard deviation of the fund is 24.59% compared to the category average of 23.94%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.22, 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. FSCRX's 5-year performance has produced a negative alpha of -6.23, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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.

This fund is currently holding about 75.83% in stocks, and these companies have an average market capitalization of $5.76 billion. The fund has the heaviest exposure to the following market sectors:

• Retail Trade
• Industrial Cyclical
• Technology

This fund's turnover is about 45%, so the fund managers are making fewer trades than the average comparable fund.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FSCRX is a no load fund. It has an expense ratio of 1.01% compared to the category average of 1.01%. Looking at the fund from a cost perspective, FSCRX is actually on par with 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, Fidelity Small Cap Discovery Fund ( FSCRX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and on par 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.