Mutual Fund Observer Small Cap Funds, January 2013. FundReveal analysis
These comments on the MFO Small Cap funds featured in the January 2013 Mutual Fund Observer present the FundReveal way to examine fund performance and to find the best funds. FundReveal takes the position that the past performance of a fund can indicate the decision-making capability of the fund. The most straightforward way of thinking about decision-making capability is that if a fund beats the S&P 500 (as a representation of the market) in terms of Average Daily Return and Volatility for a given time period, that is a good thing. It indicates that the fund management is consistently beating the overall market with low relative volatility based upon effective decision making approaches and processes.
FundReveal offers a counterpoint to subjective analysis.
1. It can be helpful in determining which funds in a list like the MFO small caps are most likely to outperform the market.
2. Investors can see the funds in a category that are the most positive from the FundReveal perspective, using the FundReveal screening tool.
The MFO Small Cap list:
Aegis Value (AVALX)
Artisan Small Cap (ARTSX)
Huber Small Cap Value (HUSIX)
* Lockwell Small Cap Value Institutional (LOCSX)
* Mairs and Power Small Cap Fund (MSCFX)
Pinnacle Value (PVFIX)
** RiverPark Small Cap Growth (RPSFX)
SouthernSun Small Cap Fund (SSSFX)
Vulcan Value Partners Small Cap Fund (VVPSX)
Walthausen Small Cap Value Fund (WSCVX)
* Data limited to 1 year
** Data limited to 2 years
Comments on the MFO Small Cap List
For the funds which have at least 3 years of data, some observations.
Three funds are highlighted in Graphs - Results 1: 2012 YTD and Results 2: 2007 – 2012 YTD
PVFIX, SSSFX, WSCVX.
The MFO funds display, in general, higher volatility than the S&P 500 for both 2012 YTD and the past 5 years. The one fund that had lower volatility in both time horizons is Pinnacle Value (PVFIX).
2012 YTD 2007-2012
Volatility ADR Volatility ADR
PVFIX 7% 17% 10% 5%
S&P 13% 14% 21% 7%
PVFIX demonstrates consistent performance with low volatility, factors to be combined with subjective analysis available from other sources.
Two other funds have delivered high ADR (Average Daily Return), but also present higher risk than the S&P. In this case Southern Sun Small Cap (SSSFX) and Walthausen Small Cap (WSCVX) have high relative volatility, but they have delivered high ADR over both time horizons. From the FundReveal perspective, SSSFX has the edge in terms of decision-making capability because it has delivered higher ADR than the S&P in 10 Quarters and lower ADR in 6 Quarters, while WSCVX had delivered higher ADR than the S&P in 7 Quarters and lower ADR in 7 Quarters.
So, bottom line, from the FundReveal perspective PVFIX and SSSFX are the more attractive funds in this lineup. Again, we expect that this point of view will be combined with other information as investors make their own determination of the funds that will beat the market in the future. Investors get a snapshot of the relative risk / return performance of the MFO Small Cap funds in Results graphics 1 and 2.
2. Investors can see the funds in a category that are the most positive from the FundReveal perspective, using the FundReveal screening tool. Filtering metrics include:
Sector or Style,
Average Daily Return,
Worst Case Return,
Risk Return Rating,
Up Market Excess Return,
Down Market Excess Return.
Some Small Cap funds worthy of consideration:
- Schwartz Value fund RCMFX
- Third Avenue Small-Cap Fund TVSVX
Greater than S&P ADR, Lower Volatility with a medium Persistence Rating (33%).
- Wasatch Micro Cap Value fund WAMVX
Greater than S&P ADR, Lower Volatility 2007-2012 YTF, with a mediumPersistence Rating (30%).
No FundReveal covered Small Growth funds delivered A performance in 2012 YTD.
- Pinnacle Value fund PVFIX An MFO focus fund, discussed above. It has a high Persistence Rating (50%).
- Intrepid Small Cap Fund ICMAX
- ING American Century Small-Mid Cap Value ISMSX
Greater than S&P ADR, Lower Volatility for 2007-2012 YTF, with a medium Persistence Rating (25%).
Investors can learn more about these funds and FundReveal at www.fundreveal.com. Free trial available.