Any investors hoping to find a Small Cap Growth fund could think about starting with Alger Small Cap Focus A (AOFAX Quick QuoteAOFAX - Free Report) . AOFAX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

AOFAX 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

Alger Funds is based in New York, NY, and is the manager of AOFAX. Alger Small Cap Focus A debuted in March of 2008. Since then, AOFAX has accumulated assets of about $127.36 million, according to the most recently available information. The fund's current manager, Amy Zhang, has been in charge of the fund since February of 2015.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of -5.15%, and it sits in the bottom third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of 0.41%, 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 15.37%, the standard deviation of AOFAX over the past three years is 22.17%. The fund's standard deviation over the past 5 years is 23.08% compared to the category average of 15.18%. 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 1.09, so it is likely going to be more volatile than the market at large. 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. With a negative alpha of -18.27, 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 largely on equities that are traded in the United States.

This fund is currently holding about 90.5% in stocks, with an average market capitalization of $7.11 billion. The fund has the heaviest exposure to the following market sectors:

• Health
• Technology
• Other

Turnover is about 60.26%, so those in charge of the fund make fewer trades than its comparable peers.

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, AOFAX is a load fund. It has an expense ratio of 1.22% compared to the category average of 0.99%. From a cost perspective, AOFAX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to 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, worse downside risk, and higher fees, Alger Small Cap Focus A ( AOFAX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

For additional information on the Small Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into AOFAX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.