If investors are looking at the Small Cap Growth fund category, make sure to pass over Virtus KAR Small-Cap Growth I (PXSGX Quick QuotePXSGX - Free Report) . PXSGX possesses 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. Since Virtus KAR Small-Cap Growth I made its debut in June of 2006, PXSGX has garnered more than $1.40 billion in assets. The fund is currently managed by Todd Beiley who has been in charge of the fund since April of 2008.

Performance

Investors naturally seek funds with strong performance. PXSGX has a 5-year annualized total return of -0.05%, 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 3.37%, 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 21.44% compared to the category average of 15.87%. Over the past 5 years, the standard deviation of the fund is 19.93% compared to the category average of 15.45%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.93, so investors should note that it is hypothetically less volatile than 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. The fund has produced a negative alpha over the past 5 years of -11.59, which shows that 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 1.00%. Looking at the fund from a cost perspective, PXSGX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $100,000; each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into consideration. 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, average downside risk, and higher fees, this fund looks like a somewhat weak choice for investors right now.

This could just be the start of your research on PXSGX in the Small Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.