Back to top

Is ClearBridge Small Cap Growth A (SASMX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Any investors hoping to find a Small Cap Growth fund could think about starting with ClearBridge Small Cap Growth A (SASMX - Free Report) . SASMX possesses 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 Small Cap Growth funds is an area filled with options, such as SASMX. 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

SASMX is a part of the Legg Mason family of funds, a company based out of Baltimore, MD. ClearBridge Small Cap Growth A debuted in August of 1999. Since then, SASMX has accumulated assets of about $955 million, according to the most recently available information. The fund's current manager, Jeffrey J. Russell, has been in charge of the fund since March of 2007.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 10.33%, and is in the middle 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 16.03%, 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 SASMX over the past three years is 16.58% compared to the category average of 10.31%. The standard deviation of the fund over the past 5 years is 16.9% compared to the category average of 10.47%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, SASMX lost 50.47% and outperformed its peer group by 3%. 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. SASMX has a 5-year beta of 1.19, which means it is likely to be more volatile than 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. SASMX has generated a negative alpha over the past five years of -0.86, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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.

Right now, 94.35% of this mutual fund's holdings are stocks, with an average market capitalization of $4.89 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Services
  3. Other
  4. Industrial Cyclical
  5. Retail Trade
Turnover is 16%, which means this fund makes fewer trades than comparable funds.

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, SASMX is a load fund. It has an expense ratio of 1.20% compared to the category average of 1.22%. So, SASMX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

Bottom Line

Overall, ClearBridge Small Cap Growth A ( SASMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, ClearBridge Small Cap Growth A ( SASMX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare SASMX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


ClearBridge Small Cap Growth A (SASMX) - free report >>

Published in