Is Wasatch Ultra Growth (WAMCX) 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 Wasatch Ultra Growth (WAMCX) as a possibility. WAMCX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
The world of Small Cap Growth funds is an area filled with options, such as WAMCX. 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.
WAMCX is a part of the Wasatch family of funds, a company based out of Salt Lake City, UT. Wasatch Ultra Growth debuted in August of 1992. Since then, WAMCX has accumulated assets of about $370.82 million, according to the most recently available information. The fund’s current manager, John Malooly, has been in charge of the fund since January of 2012.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of -1.5%, and is in the bottom 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 4.95%, 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. Compared to the category average of 16.03%, the standard deviation of WAMCX over the past three years is 23.95%. Looking at the past 5 years, the fund’s standard deviation is 24.55% compared to the category average of 17.36%. This makes the fund more volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. WAMCX has a 5-year beta of 1.28, 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. WAMCX’s 5-year performance has produced a negative alpha of -18.25, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, WAMCX is a no load fund. It has an expense ratio of 1.20% compared to the category average of 1.06%. Looking at the fund from a cost perspective, WAMCX is actually more expensive than its peers.
This fund requires a minimum initial investment of $2,000, and each subsequent investment should be at least $100.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, Wasatch Ultra Growth ( WAMCX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, Wasatch Ultra Growth ( WAMCX ) looks like a somewhat weak 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 WAMCX too 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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This article originally published on Zacks Investment Research (zacks.com).