OSCAX
Invesco Main Street SmallCap-A
Introduction to Invesco Main Street SmallCap-A
The Invesco Main Street SmallCap-A (OSCAX) is a mutual fund designed to seek capital appreciation by investing primarily in small-cap companies. With a focus on small-cap stocks, the fund aims to capture the growth potential inherent in smaller companies that are often overlooked by larger funds. The fund invests at least 80% of its net assets in securities of small-cap companies, primarily through common stocks. This strategy is intended to provide investors with exposure to the dynamic and potentially high-growth segment of the market. Managed by Invesco, a well-respected name in the investment community, OSCAX is positioned to offer investors a robust option for diversifying their portfolios with small-cap equities.
At A Glance
Executive Summary
OSCAX offers a 40.23% 1-year return with a focus on small-cap stocks, outperforming its benchmark with a 1.08% expense ratio.
Strong 1-year return of 40.23%. Focus on small-cap growth potential. Diverse sector allocation with high healthcare exposure.
Higher expense ratio at 1.08%. Higher beta indicates increased volatility. Limited yield at 0.55%.
Impressive Recent Performance
OSCAX has demonstrated impressive performance over the past year, boasting a 1-year return of 40.23%, which significantly outpaces its benchmark, the S&P 500 Total Return Index, which returned 37.62% over the same period. This strong performance highlights the fund’s ability to capitalize on the growth opportunities within the small-cap sector. The fund’s annualized returns over five years stand at 12.23%, and since inception, it has achieved a return of 10.34%. These figures underscore the fund’s consistent ability to deliver strong returns over various time horizons, making it an attractive option for investors seeking growth in the small-cap space.
Sector Allocation and Diversification
OSCAX’s sector allocation is a key component of its investment strategy, providing diversification across various industries. The fund has a significant allocation to the healthcare sector, which comprises 19.64% of its portfolio, followed by industrials at 17.11% and technology at 16.15%. This diversified sector exposure allows the fund to mitigate risks associated with any single industry while capitalizing on growth opportunities across different sectors. The fund’s allocation to financials (15.08%) and cyclicals (11.93%) further enhances its diversification, providing a balanced approach to small-cap investing. This strategic allocation is designed to optimize returns while managing risk, making OSCAX a compelling choice for investors looking for diversified small-cap exposure.
Risk and Volatility Considerations
Investors should be aware of the risk and volatility associated with OSCAX, as indicated by its risk metrics. The fund has a beta of 1.22, suggesting it is more volatile than the broader market. Its standard deviation of 5.53% and a Sharpe ratio of 0.13 indicate moderate risk-adjusted returns. The fund’s alpha of 2.57% reflects its ability to generate returns above its benchmark, while the Treynor ratio of 2.11 suggests efficient risk management relative to its market exposure. Despite these positive indicators, the fund’s maximum drawdown of -8.7% highlights the potential for significant short-term losses, which investors should consider when evaluating their risk tolerance.
Competitive Expense Ratio Analysis
OSCAX’s expense ratio of 1.08% is a critical factor for investors to consider, especially when comparing it to similar funds. While this expense ratio is higher than some of its peers, such as Segall Bryant & Hamill SmallCap Gr-Ret (WTSGX) with an expense ratio of 0.0104, it is important to weigh this cost against the fund’s strong performance. The fund’s ability to deliver a 40.23% return over the past year may justify the higher expense ratio for investors seeking superior returns in the small-cap space. However, cost-conscious investors may want to explore other options with lower expense ratios if cost is a primary concern.
Top Holdings and Market Cap Focus
The top holdings of OSCAX reflect its focus on small-cap companies, with significant investments in ADMA Biologics Inc (2.64%), Summit Materials Inc Class A (1.95%), and KB Home (1.94%). These holdings are indicative of the fund’s strategy to invest in companies with strong growth potential within the small-cap segment. The fund’s market cap allocation is heavily weighted towards small-cap stocks, comprising 76.38% of its portfolio, with minimal exposure to medium-cap (4.00%) and no exposure to large-cap stocks. This focus on small-cap equities aligns with the fund’s objective of capital appreciation through investments in smaller, potentially high-growth companies.
Comparison with Similar Funds
When comparing OSCAX to similar funds, such as Allspring Discovery SmallCap Growth-A (EGWAX) and Oberweis SmallCap Opportunities (OBSOX), OSCAX stands out with its strong 1-year return of 40.23%. While EGWAX and OBSOX have returns of 39.28% and 34.70%, respectively, OSCAX’s performance is competitive within the small-cap growth category. However, investors should note that OSCAX’s expense ratio of 1.08% is higher than some of its peers, which may impact net returns. Additionally, OSCAX’s beta of 1.22 indicates higher volatility compared to some alternatives, which may be a consideration for risk-averse investors.
Conclusion: Suitability for Growth-Oriented Investors
In conclusion, OSCAX is a compelling option for investors seeking exposure to the small-cap segment with a focus on capital appreciation. Its strong recent performance, diversified sector allocation, and strategic focus on small-cap equities make it an attractive choice for growth-oriented investors. However, the fund’s higher expense ratio and increased volatility may not be suitable for all investors, particularly those with a lower risk tolerance or a focus on cost efficiency. Overall, OSCAX is well-suited for investors who are willing to accept higher risk in exchange for the potential of superior returns in the small-cap market.
Similar Securities
TRSSX: TRPrice Inst SmallCap Stock-Inst | High Growth Small-Cap Fund
TRSSX offers high growth potential with a focus on small-cap stocks, boasting a 36.72% 1-year return, ideal for aggressive investors seeking capital growth.
FRVLX: Franklin SmallCap Value-A | Small-Cap Value Investment
FRVLX offers small-cap value exposure with a 0.99% expense ratio and 36.24% 1-year return, focusing on undervalued stocks for growth.
SCSMX: ClearBridge SmallCap Growth-C | Small Cap Growth Fund Analysis
SCSMX offers exposure to small-cap growth stocks with a high expense ratio of 1.93%. It underperforms its benchmark but provides diversification in tech and healthcare.
PSLAX: Putnam SmallCap Value-A | Undervalued Small-Cap Investment
PSLAX focuses on undervalued small-cap US stocks, offering potential for capital appreciation with a 1.18% expense ratio.
FRMCX: Franklin MicroCap Value-A | High-Return Micro-Cap Investment
FRMCX targets undervalued micro-cap stocks for growth and income, with a 1.16% expense ratio and 31.85% 1-year return, ideal for risk-tolerant investors.
Futher Reading
https://finance.yahoo.com/quote/OSCAX/”>Yahoo: Invesco Main Street SmallCap-A
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