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Is Brown Capital Management Small Company Investor (BCSIX) a Strong Mutual Fund Pick Right Now?

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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 - Free Report) . BCSIX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

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

History of Fund/Manager

BCSIX is a part of the Brown Capital Management family of funds, a company based out of Rocky Mount, NC. Brown Capital Management Small Company Investor made its debut in July of 1992, and since then, BCSIX has accumulated about $318.05 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of -2.36%, 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 3.82%, 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. The standard deviation of BCSIX over the past three years is 21% compared to the category average of 17.89%. Looking at the past 5 years, the fund's standard deviation is 21.37% compared to the category average of 17.53%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.02, so investors should note that it is hypothetically as volatile as 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 -15.89, 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 mostly on equities that are traded in the United States.

The mutual fund currently has 90.38% of its holdings in stocks, which have an average market capitalization of $9.38 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Health
  • Other
  • Industrial Cyclical

With turnover at about 11%, this fund is making 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, BCSIX is a no load fund. It has an expense ratio of 1.32% compared to the category average of 1.05%. So, BCSIX is actually more expensive than its peers from a cost perspective.

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

Fees charged by investment advisors have not been taken into consideration. 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.

Want even more information about BCSIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.


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