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Looking for a Small Cap Growth fund? Getting started with Brown Capital Management Small Company Investor (BCSIX) shouldn’t be a possibility at this time. BCSIX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors such as size, cost, and past performance.

Objective

BCSIX is one of many small cap growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with market caps of less than $ 2 billion and significant growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and sectors.

Fund / manager history

Brown Capital Management is based in Rocky Mount, North Carolina, and is the manager of BCSIX. Brown Capital Management Small Company Investor debuted in July 1992, and since then BCSIX has accumulated approximately $ 2.29 billion in assets, as of the most recent date available. The current manager of the fund is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. BCSIX has a 5-year total annualized return of 15.12% and is in the top third of its category peers. If you’re interested in shorter timeframes, don’t overlook the fund’s 3-year total annualized return of 18.49%, which puts it in the top third over that timeframe.

When looking at the performance of a fund, it is also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of BCSIX over the past three years is 19.46% compared to the category average of 13.49%. The fund’s standard deviation over the past 5 years is 18.27% compared to the category average of 13.17%. This makes the fund more volatile than its peers over the past half decade.

Risk factors

The volatility of this segment cannot be ignored, however, as it is always important for investors to remember the downsides of any potential investment. In the case of BCSIX, the fund lost 40.91% in the last bear market and outperformed its peer group by 12%. This makes the fund a better choice than its peers in a declining market environment.

Investors should note that the fund has a beta of 1.26 over 5 years, so it will likely be more volatile than the market as a whole. Since alpha represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, it is worth paying attention to this metric as well. With a positive alpha of 2.11, the managers of this portfolio are adept at selecting stocks that generate returns above the benchmark.

Expenses

For investors, it is essential to take a closer look at the parameters related to costs, as costs are increasingly important for investments in mutual funds. Competition is intensifying in this space, and a lower cost product is likely to outperform its otherwise identical counterpart, all other things being equal. In terms of fees, BCSIX is a no-load fund. It has an expense ratio of 1.25% compared to the category average of 1.26%. Looking at the fund from a cost perspective, BCSIX is actually less expensive than its peers.

Investors should also note that the minimum initial investment for the product is $ 5,000 and that each subsequent investment must be $ 500.

Final result

Overall, Brown Capital Management Small Company Investor (BCSIX) ranks low as a Zacks mutual fund, and in conjunction with its comparatively strong performance, greater downside risk and lower fees, this fund appears to be a somewhat weak choice for investors at this time.

Do not stop here for your research on Small Cap Growth funds. We also have a lot more on our site to help you find the best possible fund for your portfolio. Be sure to check out www.zacks.com/funds/mutual-funds for more information on the world of funds, and feel free to compare BCSIX to its peers for more information. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.

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