SMEAX
Invesco SmallCap Equity-A
Targeting Small-Cap Growth
Invesco SmallCap Equity-A (SMEAX) is designed to provide long-term capital growth by investing primarily in small-cap equity securities. The fund focuses on companies within the Russell 2000 Index, which is known for its diverse range of small-cap stocks. This focus allows SMEAX to tap into the growth potential of smaller companies that are often overlooked by larger funds. With a strategic allocation towards small-cap stocks, SMEAX aims to capture the high growth potential inherent in this segment of the market. The fund’s objective aligns with investors seeking aggressive growth opportunities, making it a suitable choice for those willing to embrace the volatility associated with small-cap investments.
At A Glance
Executive Summary
SMEAX offers robust small-cap growth with a 41.54% 1-year return, outperforming peers. High alpha and diversified sector allocation enhance its appeal.
Strong 1-year return of 41.54%. High alpha of 3.87% indicates superior performance. Diverse sector allocation with focus on financials and industrials.
Higher expense ratio of 1.26%. Zero yield may not suit income-focused investors. Higher beta of 1.26 indicates increased volatility.
Impressive Recent Performance
SMEAX has demonstrated remarkable performance over the past year, boasting a 41.54% return, significantly outperforming its benchmark, the S&P 500 Total Return Index, which returned 37.62% over the same period. This impressive performance can be attributed to the fund’s strategic stock selection and sector allocation, which have capitalized on market trends favoring small-cap equities. The fund’s alpha of 3.87% further underscores its ability to generate returns above the benchmark, highlighting the effectiveness of its management strategy. Investors looking for a fund with a strong track record of recent performance may find SMEAX particularly appealing.
Sector Allocation and Diversification
SMEAX’s sector allocation is a key component of its investment strategy, with significant exposure to financials (21.05%) and industrials (20.94%). This diversified approach allows the fund to mitigate risks associated with sector-specific downturns while capitalizing on growth opportunities across various industries. The fund also maintains a notable allocation to technology (13.30%) and healthcare (14.29%), sectors known for their innovation and growth potential. By spreading investments across multiple sectors, SMEAX reduces the impact of volatility in any single area, providing a balanced approach to small-cap investing.
Risk and Volatility Considerations
Investors should be aware of the inherent risks associated with SMEAX, particularly its higher beta of 1.26, which indicates greater volatility compared to the broader market. This higher volatility is typical of small-cap funds, reflecting the dynamic nature of smaller companies. However, the fund’s Sharpe ratio of 0.20 and Treynor ratio of 3.08 suggest that it has been able to achieve returns commensurate with its risk level. Additionally, the fund’s maximum drawdown of -9.4% and quick recovery period demonstrate its resilience in adverse market conditions. Potential investors should weigh these risk factors against the fund’s growth potential when considering SMEAX for their portfolio.
Competitive Expense Ratio Analysis
While SMEAX’s expense ratio of 1.26% is higher than some of its peers, it is important to consider this in the context of the fund’s performance. The fund’s ability to deliver a 41.54% return over the past year may justify the higher costs for investors seeking superior growth. When compared to similar funds like Allspring Discovery SmallCap Growth-A (EGWAX) and Oberweis SmallCap Opportunities (OBSOX), SMEAX’s expense ratio is competitive, especially given its strong performance metrics. Investors should assess whether the potential for high returns outweighs the cost of investment when evaluating SMEAX.
Top Holdings and Stock Selection
SMEAX’s top holdings reflect its strategic focus on high-potential small-cap stocks. The fund’s largest positions include Taylor Morrison Home Corp (2.38%), Sprouts Farmers Market Inc (2.12%), and Piper Sandler Cos (1.94%). These companies represent a diverse range of industries, from homebuilding to financial services, underscoring the fund’s commitment to diversification. The selection of these stocks is driven by their growth prospects and alignment with the fund’s investment strategy. By carefully selecting stocks with strong fundamentals and growth potential, SMEAX aims to maximize returns for its investors.
Comparative Analysis with Peers
When compared to similar funds, SMEAX stands out for its strong 1-year return of 41.54%, surpassing peers like Carillon Eagle SmallCap Growth-A (HRSCX) and Optimum Small/MidCap Growth-A (OASGX). While its expense ratio is slightly higher, the fund’s superior performance and high alpha of 3.87% make it a compelling choice for growth-focused investors. Additionally, SMEAX’s diversified sector allocation and strategic stock selection contribute to its competitive edge. Investors should consider these factors when comparing SMEAX to other small-cap growth funds, particularly if they prioritize performance over cost.
Conclusion: A Strong Choice for Growth Investors
Invesco SmallCap Equity-A (SMEAX) offers a compelling option for investors seeking exposure to small-cap growth opportunities. With its impressive recent performance, strategic sector allocation, and robust stock selection, the fund is well-positioned to capitalize on the growth potential of small-cap equities. While the fund’s higher expense ratio and volatility may be a consideration for some, its strong track record and high alpha suggest that it can deliver superior returns. SMEAX is particularly suited for investors with a higher risk tolerance who are focused on long-term capital appreciation. As such, it stands out as a strong choice for those looking to enhance their portfolio with small-cap growth potential.
Similar Securities
GTSAX: Invesco SmallCap Growth-A | High-Potential Small-Cap Investment
GTSAX offers high growth potential with a 41.82% 1-year return, focusing on small-cap equities. Competitive in its category with a 1.17% expense ratio.
JATTX: Janus Henderson Triton-T | Small Cap Growth Fund Analysis
JATTX offers small-cap growth with a 0.91% expense ratio, focusing on tech and healthcare sectors. Ideal for aggressive growth investors.
PRSVX: TRPrice SmallCap Value-Inv | Small-Cap Growth Opportunity
PRSVX offers a unique focus on undervalued small-cap stocks with a competitive 0.8% expense ratio, aiming for long-term growth.
BDSIX: BlackRock Advantage SmallCap Core-Inst | Small-Cap Growth Fund
BDSIX offers a competitive expense ratio of 0.5% and strong 1-year returns of 41.25%, focusing on small-cap equities for growth.
LMASX: ClearBridge SmallCap-C | Small-Cap Growth Investment
LMASX offers small-cap equity exposure with a focus on capital appreciation. Despite a high expense ratio, it provides a unique mid-cap allocation.
Futher Reading
https://finance.yahoo.com/quote/SMEAX/”>Yahoo: Invesco SmallCap Equity-A
Disclaimer: The information provided on this website is for informational purposes only and should not be construed as financial, investment, or other professional advice. PeepFinance does not endorse or recommend any specific securities, investments, or strategies. The opinions expressed are solely those of the authors and are not intended to be used as the basis for any investment decisions. All investments carry risks, and readers are encouraged to conduct their own research or consult with a financial professional before making any financial decisions. PeepFinance and its authors are not responsible for any losses or damages arising from the use of this information.