VSCAX
Invesco SmallCap Value-A
Introduction to Invesco SmallCap Value-A
The Invesco SmallCap Value-A (VSCAX) is a mutual fund designed to achieve capital appreciation by investing primarily in a diversified portfolio of equity securities of small-capitalization companies. As part of the Invesco family, this fund targets small company stocks, offering investors exposure to potentially high-growth opportunities within the small-cap value category. With a focus on small-cap equities, VSCAX aims to capitalize on undervalued stocks that have the potential for significant appreciation, making it an attractive option for investors seeking aggressive growth strategies.
At A Glance
Executive Summary
VSCAX offers high alpha and small-cap exposure with a 49.69% 1-year return, ideal for aggressive investors seeking capital appreciation.
High alpha of 12.03% indicating strong performance potential. Diverse sector allocation with a focus on technology and financials. Strong 1-year return of 49.69%, outperforming the benchmark.
Higher expense ratio of 1.12% compared to peers. Increased volatility with a beta of 1.31. Limited yield of 0.43% for income-focused investors.
Impressive Alpha and Risk Metrics
VSCAX stands out with an impressive alpha of 12.03%, indicating its ability to outperform the market on a risk-adjusted basis. This high alpha suggests that the fund’s management has been successful in selecting stocks that generate returns above the benchmark, the S&P 500 Total Return Index. However, the fund’s beta of 1.31 indicates higher volatility compared to the market, which means investors should be prepared for potential fluctuations in value. The Sharpe ratio of 0.60 and Treynor ratio of 9.18 further highlight the fund’s risk-adjusted performance, making it a compelling choice for those willing to accept higher risk for the possibility of greater returns.
Sector Allocation and Portfolio Composition
The sector allocation of VSCAX is diverse, with significant investments in technology (18.87%), financials (20.18%), and industrials (23.32%). This diversified approach allows the fund to capitalize on growth opportunities across various sectors, reducing the risk associated with over-concentration in a single industry. The top holdings, including Coherent Corp and Western Alliance Bancorp, reflect a strategic focus on companies with strong growth potential. The fund’s allocation to small-cap stocks (48.90%) and medium-cap stocks (33.63%) further emphasizes its commitment to capturing value in the small-cap space, providing investors with exposure to companies that may be overlooked by larger funds.
Competitive Performance and Returns
VSCAX has delivered competitive performance, with a remarkable 1-year return of 49.69%, significantly outperforming its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. This strong performance is indicative of the fund’s effective stock selection and management strategies. Over longer periods, the fund has also shown robust returns, with a 5-year annualized return of 21.19% and a 10-year return of 12.70%. These figures demonstrate the fund’s ability to generate consistent returns over time, making it an appealing option for investors seeking long-term capital appreciation.
Expense Ratio and Cost Considerations
While VSCAX offers impressive returns, its expense ratio of 1.12% is higher than some of its peers, which may be a consideration for cost-conscious investors. The expense ratio reflects the cost of managing the fund, and while it is not the lowest in the category, the fund’s strong performance may justify the higher fees for some investors. When comparing similar funds, such as Invesco Discovery-A and Voya SmallCap Opportunities-I, which have lower expense ratios, investors should weigh the potential for higher returns against the cost of investment to determine the best fit for their portfolio.
Max Drawdown and Recovery Analysis
The fund experienced a maximum drawdown of -13.2%, with a drawdown length of 1 month and a recovery length of 2 months. This relatively quick recovery period suggests resilience in the fund’s portfolio, allowing it to bounce back from market downturns effectively. The peak and valley dates, from July 16, 2024, to August 7, 2024, highlight a period of volatility that investors should be aware of. Despite this, the fund’s ability to recover swiftly from drawdowns is a positive indicator for investors concerned about market fluctuations and the potential for loss.
Comparison with Similar Funds
When compared to similar funds such as Invesco Discovery-A (OPOCX) and Voya SmallCap Growth-I (TCMSX), VSCAX holds its ground with a strong 1-year return of 49.69%. While these funds also offer competitive returns, VSCAX’s focus on small-cap value stocks provides a unique investment angle. The fund’s higher beta of 1.31 compared to its peers indicates a higher risk profile, which may appeal to investors seeking aggressive growth. However, the higher expense ratio of VSCAX should be considered when evaluating its overall value proposition against these alternatives.
Conclusion: Suitability for Aggressive Investors
In conclusion, Invesco SmallCap Value-A (VSCAX) is a compelling choice for aggressive investors seeking capital appreciation through exposure to small-cap value stocks. With its high alpha, diverse sector allocation, and strong historical performance, the fund offers significant growth potential. However, the higher expense ratio and increased volatility may not suit all investors, particularly those with a lower risk tolerance or a focus on income generation. For those willing to embrace the risks associated with small-cap investing, VSCAX presents an opportunity to capitalize on undervalued stocks with the potential for substantial returns.
Similar Securities
VSCAX: Invesco SmallCap Value-A | High Alpha Small-Cap Investment
VSCAX offers high alpha and small-cap exposure with a 49.69% 1-year return, ideal for aggressive investors seeking capital appreciation.
JSIVX: Janus Henderson SmallCap Value-L | Undervalued Small-Cap Stock Investment
JSIVX offers small-cap value exposure with a focus on undervalued stocks, a 0.75% expense ratio, and a 33.33% 1-year return.
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.
LEGFX: BrandywineGLOBAL SmallCap Value-I | Small-Cap Equity Investment
LEGFX offers small-cap value exposure with a 1.22% expense ratio, focusing on undervalued stocks. It has a 25.03% 1-year return, ideal for risk-tolerant investors.
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/VSCAX/”>Yahoo: Invesco SmallCap Value-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.