Is JPMorgan Small Cap Blend A (VSCOX) a Strong Mutual Fund Pick Right Now?

Small Cap Growth fund seekers may want to consider taking a look at JPMorgan Small Cap Blend A (VSCOX). VSCOX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

VSCOX 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

J.P. Morgan is responsible for VSCOX, and the company is based out of Boston, MA. The JPMorgan Small Cap Blend A made its debut in May of 1997 and VSCOX has managed to accumulate roughly $474.93 million in assets, as of the most recently available information. The fund's current manager, Eytan Shapiro, has been in charge of the fund since September of 2004.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 3.29%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 8.4%, 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. Over the past three years, VSCOX's standard deviation comes in at 16.89%, compared to the category average of 12.42%. The standard deviation of the fund over the past 5 years is 17.42% compared to the category average of 14.13%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.98, 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. VSCOX has generated a negative alpha over the past five years of -9.11, demonstrating 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 primarily on equities that are traded in the United States.

Currently, this mutual fund is holding 86.06% in stocks, and these companies have an average market capitalization of $5.60 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Industrial Cyclical
• Health
• Technology
• Other

With turnover at about 49%, this fund makes fewer trades than the average comparable fund.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VSCOX is a load fund. It has an expense ratio of 1.24% compared to the category average of 0.95%. Looking at the fund from a cost perspective, VSCOX is actually more expensive than its peers.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.

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

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and higher fees, JPMorgan Small Cap Blend A ( VSCOX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average 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. 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.

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