Small Cap Growth fund seekers should not consider taking a look at Fidelity Small Cap Discovery Fund (FSCRX Quick QuoteFSCRX - Free Report) at this time. FSCRX holds 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 FSCRX. 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

FSCRX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Small Cap Discovery Fund made its debut in January of 2001 and FSCRX has managed to accumulate roughly $2.58 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 has delivered a 5-year annualized total return of 11.78%, and is in the top 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 4.38%, which places it in the top 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. FSCRX's standard deviation over the past three years is 20.78% compared to the category average of 0%. The fund's standard deviation over the past 5 years is 24.44% compared to the category average of 47%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.2, so investors should note that it is hypothetically more 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. Over the past 5 years, the fund has a negative alpha of -4.92. This means 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 largely on equities that are traded in the United States.

As of the last filing date, the mutual fund has 85.28% of its assets in stocks, which have an average market capitalization of $5.34 billion. The fund has the heaviest exposure to the following market sectors:

• Industrial Cyclical
• Retail Trade
• Technology

This fund's turnover is about 45%, so the fund managers are making more trades per year than the comparable 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 1.09% compared to the category average of 94%. FSCRX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively strong performance, better 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.

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 FSCRX to its peers 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.