Is Fidelity Small Cap Discovery Fund (FSCRX) a Strong Mutual Fund Pick Right Now?

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

Objective

FSCRX 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

FSCRX is a part of the Fidelity family of funds, a company based out of Boston, MA. The Fidelity Small Cap Discovery Fund made its debut in January of 2001 and FSCRX has managed to accumulate roughly $2.18 billion in assets, as of the most recently available information. The fund's current manager, Forrest St. Clair, has been in charge of the fund since March of 2023.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 7.92%, and is in the top 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 9.55%, which places it in the middle 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. FSCRX's standard deviation over the past three years is 17.58% compared to the category average of 18.01%. The standard deviation of the fund over the past 5 years is 18.32% compared to the category average of 18.98%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.03, the fund is likely to be as volatile as the market average. 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. FSCRX has generated a negative alpha over the past five years of -5.42, 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 mostly on equities that are traded in the United States.

This fund is currently holding about 89.62% in stocks, with an average market capitalization of $5.35 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Industrial Cyclical
• Technology
• Retail Trade

This fund's turnover is about 80%, so the fund managers are making more trades in a given year than the category average.

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, FSCRX is a no load fund. It has an expense ratio of 0.74% compared to the category average of 0.99%. FSCRX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

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

Bottom Line

Overall, Fidelity Small Cap Discovery Fund ( FSCRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity Small Cap Discovery Fund ( FSCRX ) 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. 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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