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Is TCM Small Cap Growth Fund (TCMSX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Small Cap Growth funds, consider TCM Small Cap Growth Fund (TCMSX - Free Report) as a possibility. TCMSX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Zacks Small Cap Growth funds is an area filled with options, such as TCMSX. 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

TCM Funds is responsible for TCMSX, and the company is based out of Portland, OR. The TCM Small Cap Growth Fund made its debut in October of 2004 and TCMSX has managed to accumulate roughly $370.80 million in assets, as of the most recently available information. The fund is currently managed by Richard J. Johnson who has been in charge of the fund since October of 2004.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 16.97%, and is in the top 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 14.71%, which places it in the top third during this time-frame.

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 TCMSX over the past three years is 12.97% compared to the category average of 13.89%. The fund's standard deviation over the past 5 years is 13.2% compared to the category average of 13.63%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. TCMSX lost 52.64% in the most recent bear market and outperformed its peer group by 0.43%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. TCMSX has a 5-year beta of 0.97, which means it is likely to be as volatile as the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 1.82, which shows that managers in this portfolio are skilled in picking 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, TCMSX is a no load fund. It has an expense ratio of 0.95% compared to the category average of 1.30%. TCMSX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $500.

Bottom Line

Overall, TCM Small Cap Growth Fund has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential 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 TCMSX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.




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