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Is BlackRock Small Cap Growth Equity A (CSGEX) a Strong Mutual Fund Pick Right Now?

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

Objective

The world of Small Cap Growth funds is an area filled with options, such as CSGEX. 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.

History of Fund/Manager

CSGEX is a part of the BlackRock family of funds, a company based out of New York, NY. BlackRock Small Cap Growth Equity A debuted in September of 1993. Since then, CSGEX has accumulated assets of about $225.22 million, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 16.11%, and it sits in the middle 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 12.93%, which places it in the middle third during this time-frame.

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 17.61%, the standard deviation of CSGEX over the past three years is 25.79%. Looking at the past 5 years, the fund's standard deviation is 21.3% compared to the category average of 14.51%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.21, so investors should note that it is hypothetically more volatile than 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. CSGEX has generated a negative alpha over the past five years of -2.89, demonstrating that managers in this portfolio find it difficult to pick 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 mostly on equities that are traded in the United States.

As of the last filing date, the mutual fund has 96.25% of its assets in stocks, which have an average market capitalization of $4.33 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Health

  3. Retail Trade

  4. Other

This fund's turnover is about 114%, so the fund managers are making more trades in a given year than the category average.

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, CSGEX is a load fund. It has an expense ratio of 0.75% compared to the category average of 1.21%. CSGEX is actually cheaper than its peers when you consider factors like cost.

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.

Bottom Line

Overall, BlackRock Small Cap Growth Equity A ( CSGEX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, BlackRock Small Cap Growth Equity A ( CSGEX ) looks like a great potential choice for investors right now.

Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare CSGEX to its peers as well for additional 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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