Mutual fund research 1 attempt

Mutual Fund ResearchD.T

Top Results

• (1) Brown Advisory Small-Cap Growth I• (1) Eagle Small Cap Growth A• (1) Vanguard Small Cap Growth Index Inv• (1) UBS US Small Cap Growth Y• (1) Wells Fargo Advantage Small CoGr Adm• (2) T. Rowe Price New Horizons

Brown Advisory

• Ticker: BIASX• At-a-glance:• Very concentrated: 56 holdings

• Pros: Well-rounded• Satisfactory performance overall• Downside Capture – minor

• Cons:• Weak Upside Capture. • Fails for 3yr and 5yr. But Strong in 10yr

• Good returns, trailing Vanguard despite higher fees ( 3 basis points over the median)• No exceptional strength• 3-yr risk % ranking slipped to 86.45%• Risk ranking:11 over 10yr/ 86 over last 3yr

Conclusion

• The protective feature of the fund is in doubt after recent hike in risk.

• Recommend:• Conservative: Hold• Moderate: Sell• Aggressive: Sell

Eagle Small Cap Growth A

• Ticker: HRSCX• At-a-glance:• Defensive: low debt/capital, low PE compare to

peers. • Expect to perform in bad time and lag in good

time.• Sharpe: 1.2• Expense ratio: 1.16 (but MS page says 1.31)

• Pros:• Style Consistency• Good return. Show improvement overtime.• Experience Manager: 19.08 and 10.17• Risk % ranking: 55.99 for 10yr; 30.53 for 3yr

• Cons:• Downside Capture: Despite its strategy, the fund did

not perform well during bear market.• Level of return does not justify 90 basis points higher

in fee compare to Vanguard.

Conclusion

•Conservative: Sell•Moderate: Hold•Aggressive: Hold

Vanguard Small Cap Growth Index Inv.

• Pros:• Lowest Fee: 24 basis points• Long-run return: 6th . Recent return top 25. • Upside Capture: Strong at 138.48% last 10y• Low turn-over• Satisfactory risk ranking by MS: 36% for 10y

• Cons:• Capture short term downside at 144.37%

(among highest)

Conclusion

•Conservative: hold•Moderate: buy•Aggressive: hold/buy

UBS US Small Cap Growth Y

• Limited information available• At-a-glance:• Recently outperform expectation. • 10-y return rank 37• 2-y return rank 2

• Significant upside and downside capture.

• Pros:• Consistency• Upside Capture. Especially 3-yr. • Experience Managers: 14.75 and 10.06• Cons:• Downside Capture• Uncertain about return. Would the

exceptional return stay?• Long term return trails Vanguard by 1.72

basis points

Conclusion

•Conservative: Sell•Moderate: Sell•Aggressive: Hold

Wells Fargo Advantage Sm Co Gr Adm

• Ticker: NVSCX• Limited report available• At-a-glance:• High fee• Significant Fluctuations during both Bull

and Bear market.• Sharpe: 1.14

• Pros:• Return:• 10yr: 56 5yr: 40• 3yr: 15

• Experience management: 18 and 12• Upside Capture: significant• Good Morning Star Risk ranking: 12 and 20

• Cons:• High Fees despite low historical returns. • Downside Capture: very significant, 151.37 3yr

Conclusion

•Conservative: Sell•Moderate: Sell•Aggressive: Sell

T Rowe Price New Horizons

• Pros: • Proven investments: O’Reilly Automotive, FMC

Tech, Panera Bread or Chipotle. Low fees: 0.81% vs 0.24% by Vanguard• Robust return: rank 1st in 1, 3, and 5-year cat,

2nd in 10-year cat. • 10yr return: 9.47 vs 7.88 by Vanguard • Alpha: 8.03 • High Upside Capture despite low Downside

Capture

• Cons:• Manager Tenure: Ellenbogen took office in 2010.• Would the high return continue? • He led another fund for 4 years before 2010 – 11%

annualized- best in communications.• Top analysts stay with the fund.• Ellenbogen let his lieutenant take charge of bio-

tech, while he focuses on his specialty. • Risk• Very high: 75, 61, 66• Sharpe: 1.31

Conclusion

•Conservative: Sell•Moderate: Sell•Aggressive: Buy

Recap

• Vanguard and Eagle are very similar. However, Eagle’s 9 basis points higher fee is not justified by 10 year returns.• T. Rowe Price offers high expected return

at high risk and low fee.• Protection: Despite recent misstep, Brown

offers better protection over Vanguard and WF.

Recommendation

• Conservative:• Brown Advisory Small-Cap Growth I• Vanguard Small Cap Growth Index Inv

•Moderate:• Vanguard Small Cap Growth Index Inv• Eagle Small Cap Growth A

• Aggressive: • T. Rowe Price New Horizons• T. Rowe Price Diversified Sm Cap Growth • Eagle Small Cap Growth A• Vanguard Small Cap Growth Index Inv• Overall:• Vanguard Small Cap Growth Index Inv