OSMAX
Invesco International Small/Mid Com-A
Exploring OSMAX’s Growth Potential
The Invesco International Small/Mid Com-A (OSMAX) fund is designed to capture long-term capital appreciation by investing primarily in small-cap companies outside the United States. With a focus on growth, the fund targets companies with a market capitalization of $1 billion or less, ensuring that investors gain exposure to potentially high-growth opportunities in international markets. The fund’s strategy is to allocate at least 80% of its assets in equity securities of small-cap companies, making it a compelling choice for investors looking to diversify their portfolios beyond U.S. borders. This approach allows investors to tap into emerging markets and sectors that may offer significant growth potential, albeit with higher risk.
At A Glance
Executive Summary
OSMAX offers unique exposure to small-cap international stocks with a focus on growth, despite a higher expense ratio and recent underperformance.
Exposure to international small-cap stocks Potential for high growth Diversification outside U.S. markets
Higher expense ratio Recent underperformance compared to benchmark Higher volatility with negative alpha
Performance Analysis: A Mixed Bag
OSMAX has shown a mixed performance over various time frames. Over the past year, the fund delivered a return of 12.57%, which is commendable but still lags behind its benchmark, the MSCI ACWI xUS DivAdj Index, which returned 17.25%. The fund’s five-year annualized return stands at 1.91%, while its inception return is a more robust 9.23%. However, the three-year return is notably negative at -9.97%, indicating recent challenges. This performance suggests that while the fund has potential, it has struggled to consistently outperform its benchmark, particularly in recent years. Investors should weigh these performance metrics against their risk tolerance and investment goals.
Sector Allocation: A Focus on Industrials and Technology
The sector allocation of OSMAX reveals a strong emphasis on Industrials and Technology, which together comprise over 54% of the fund’s portfolio. Industrials account for 30.63%, while Technology makes up 24.12%. This allocation suggests a strategic focus on sectors that are often associated with innovation and growth, particularly in international markets. Health Care and Cyclical sectors also have significant representation, at 17.91% and 13.06% respectively, providing a balanced exposure to both defensive and growth-oriented sectors. This diversified sector allocation is designed to capitalize on global economic trends and technological advancements, offering investors a broad spectrum of growth opportunities.
Risk Metrics: Navigating Volatility
Investors in OSMAX should be aware of the fund’s risk profile, which includes a beta of 1.09, indicating slightly higher volatility compared to the market. The fund’s alpha is -4.69%, suggesting it has underperformed its benchmark on a risk-adjusted basis. The Sharpe Ratio of -0.33 and Treynor Ratio of -4.29 further highlight the fund’s challenges in delivering risk-adjusted returns. The standard deviation of 4.11% and downside risk of 4.06% indicate moderate volatility, while the max drawdown of -10.0% underscores potential losses during market downturns. These metrics suggest that while the fund offers growth potential, it also comes with significant risk, making it suitable for investors with a higher risk tolerance.
Comparative Analysis: OSMAX vs. Peers
When compared to similar funds, OSMAX presents a unique profile. Its expense ratio of 1.35% is higher than peers like American Century International Growth-A (TWGAX) and Federated Hermes International Equity-A (PMIEX), which have lower expense ratios of 0.0151% and 0.0119% respectively. In terms of performance, OSMAX’s 1-year return of 12.57% is lower than PMIEX’s 15.98% and TWGAX’s 14.35%. Despite these challenges, OSMAX offers a distinct focus on small-cap international stocks, which may appeal to investors seeking niche market exposure. However, the higher expense ratio and recent underperformance may deter cost-conscious investors.
Portfolio Composition: A Closer Look at Holdings
OSMAX’s top holdings reflect its strategic focus on small and mid-cap international companies. The largest positions include OBIC Co Ltd, Carl Zeiss Meditec AG, and Partners Group Holding AG, with allocations of 2.79%, 2.33%, and 1.76% respectively. These companies are leaders in their respective industries, offering potential for growth. The fund’s allocation to sectors like Technology and Industrials is evident in its holdings, which are poised to benefit from global economic trends. This composition underscores the fund’s commitment to identifying high-potential companies outside the U.S., providing investors with a diversified portfolio that aligns with its growth objective.
Expense Ratio: A Consideration for Investors
The expense ratio of OSMAX stands at 1.35%, which is relatively high compared to its peers. This higher cost can impact net returns, especially in years of modest performance. Investors should consider whether the fund’s unique exposure to small-cap international stocks justifies the higher expense. While the fund offers potential for significant growth, the cost of investing is an important factor that can erode returns over time. For investors prioritizing cost-efficiency, it may be worthwhile to compare OSMAX with other funds in the same category that offer similar exposure at a lower expense ratio.
Conclusion: Is OSMAX Right for You?
In conclusion, the Invesco International Small/Mid Com-A (OSMAX) fund offers a unique opportunity for investors seeking exposure to small-cap international stocks with growth potential. Its focus on sectors like Technology and Industrials aligns with global economic trends, providing a diversified portfolio. However, the fund’s higher expense ratio and recent underperformance compared to its benchmark may be a concern for some investors. OSMAX is best suited for those with a higher risk tolerance who are looking for niche market exposure and are willing to accept the associated volatility. Investors should carefully consider their investment goals and risk appetite before adding OSMAX to their portfolio.
Similar Securities
PRIDX: TRPrice International Discovery-Inv | High-Growth Foreign Investment
PRIDX offers exposure to high-growth foreign small and mid-cap stocks with a 1.24% expense ratio, outperforming its benchmark with a 1-year return of 18.36%.
OSMAX: Invesco International Small/Mid Com-A | International Small-Cap Growth Fund
OSMAX offers unique exposure to small-cap international stocks with a focus on growth, despite a higher expense ratio and recent underperformance.
Futher Reading
https://www.morningstar.com/funds/xnas/OSMAX/quote
https://finance.yahoo.com/quote/OSMAX/”>Yahoo: Invesco International Small/Mid Com-A
https://ftcloud.fasttrack.net/web/chart/OSMAX
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