Is Ivy Small Cap Growth Y (WSCYX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Small Cap Growth funds, you might want to consider passing on by Ivy Small Cap Growth Y (WSCYX) as a possibility. WSCYX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), 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 WSCYX. 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
Ivy Funds is based in Boca Raton, FL, and is the manager of WSCYX. Since Ivy Small Cap Growth Y made its debut in December of 1995, WSCYX has garnered more than $112 million in assets. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 19.36%, 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 16.37%, which places it in the middle 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. Compared to the category average of 16.3%, the standard deviation of WSCYX over the past three years is 24.58%. The fund's standard deviation over the past 5 years is 19.83% compared to the category average of 13.44%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 1.15, so investors should note that it is hypothetically more volatile than the market at large. 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. WSCYX's 5-year performance has produced a positive alpha of 0.41, which means managers in this portfolio are skilled in picking 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.
Currently, this mutual fund is holding 87.93% stock in stocks, and these companies have an average market capitalization of $5.66 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Other
Health
Industrial Cyclical
Turnover is about 40%, so those in charge of the fund make fewer trades than comparable funds.
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, WSCYX is a no load fund. It has an expense ratio of 1.28% compared to the category average of 1.21%. So, WSCYX is actually more expensive than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Bottom Line
Overall, Ivy Small Cap Growth Y ( WSCYX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and higher fees, Ivy Small Cap Growth Y ( WSCYX ) looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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