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Is Fidelity Small Cap Discovery Fund (FSCRX) a Strong Mutual Fund Pick Right Now?
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Small Cap Growth fund seekers should not consider taking a look at Fidelity Small Cap Discovery Fund (FSCRX - Free Report) at this time. FSCRX bears 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 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
Fidelity is based in Boston, MA, and is the manager of FSCRX. The Fidelity Small Cap Discovery Fund made its debut in January of 2001 and FSCRX has managed to accumulate roughly $2.21 billion in assets, as of the most recently available information. The fund is currently managed by Forrest St. Clair who has been in charge of the fund since March of 2023.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.84%, and is 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 11.98%, 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. Over the past three years, FSCRX's standard deviation comes in at 17.81%, compared to the category average of 18.17%. The standard deviation of the fund over the past 5 years is 18.85% compared to the category average of 19.3%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 1.01, the fund is likely to be as volatile as the market average. 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 -4.91, which shows that 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 principally on equities that are traded in the United States.
Right now, 77.13% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $7.28 billion. The fund has the heaviest exposure to the following market sectors:
Industrial Cyclical
Technology
Retail Trade
Health
With turnover at about 64%, this fund is making more trades in a given year than the category average.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FSCRX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.98%. From a cost perspective, FSCRX is actually cheaper than its peers.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively similar performance, average downside risk, and lower fees, Fidelity Small Cap Discovery Fund ( FSCRX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
This could just be the start of your research on FSCRX 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. 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.
View the Zacks #1 Rank List
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Is Fidelity Small Cap Discovery Fund (FSCRX) a Strong Mutual Fund Pick Right Now?
Small Cap Growth fund seekers should not consider taking a look at Fidelity Small Cap Discovery Fund (FSCRX - Free Report) at this time. FSCRX bears 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 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
Fidelity is based in Boston, MA, and is the manager of FSCRX. The Fidelity Small Cap Discovery Fund made its debut in January of 2001 and FSCRX has managed to accumulate roughly $2.21 billion in assets, as of the most recently available information. The fund is currently managed by Forrest St. Clair who has been in charge of the fund since March of 2023.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.84%, and is 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 11.98%, 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. Over the past three years, FSCRX's standard deviation comes in at 17.81%, compared to the category average of 18.17%. The standard deviation of the fund over the past 5 years is 18.85% compared to the category average of 19.3%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 1.01, the fund is likely to be as volatile as the market average. 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 -4.91, which shows that 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 principally on equities that are traded in the United States.
Right now, 77.13% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $7.28 billion. The fund has the heaviest exposure to the following market sectors:
With turnover at about 64%, this fund is making more trades in a given year than the category average.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FSCRX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.98%. From a cost perspective, FSCRX is actually cheaper than its peers.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively similar performance, average downside risk, and lower fees, Fidelity Small Cap Discovery Fund ( FSCRX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
This could just be the start of your research on FSCRX 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. 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.