Is Fidelity Small Cap Growth (FCPGX) A Strong Mutual Fund Pick Right Now?

If investors are looking at the Small Cap Growth fund category, Fidelity Small Cap Growth FCPGX could be a potential option. FCPGX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FCPGX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FCPGX. Fidelity Small Cap Growth made its debut in November of 2004, and since then, FCPGX has accumulated about $2.68 billion in assets, per the most up-to-date date available. The fund's current manager, Patrick Venanzi, has been in charge of the fund since November of 2011.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 17.86%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 15.96% The fund's 3-year annualized total return of 15.96% places it in the top third, a metric that will likely stand out if you prefer to look at shorter time frames.

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. FCPGX's standard deviation over the past three years is 12.25% compared to the category average of 9.72%. Over the past 5 years, the standard deviation of the fund is 12.79% compared to the category average of 13.81%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. FCPGX lost 55.12% in the most recent bear market and underperformed comparable funds by 2.06%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

And for investors concerned about the potential drawdown in a really bad calendar year, we can look back to 2008 for that figure. In its worst calendar year in a decade, the fund lost over 44.93%.

Investors should note that the fund has a 5-year beta of 1, so it is likely going to be as volatile as 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. With a positive alpha of 2.77, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating 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 primarily on equities that are traded in the United States.

The mutual fund currently has 99.12% of its holdings in stocks, which have an average market capitalization of $3.73 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology
2. Other

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, FCPGX is a no load fund. It has an expense ratio of 1.07% compared to the category average of 1.36%. From a cost perspective, FCPGX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Small Cap Growth FCPGX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Small Cap Growth FCPGX looks like a good potential choice for investors right now.

Your research on the Small Cap Growth segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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.