Zacks Small-Cap Core (ZSCCX)
Established in June, 2011, this fund applies a Zacks family recipe to the selection of small-cap stocks. Managed by Mitch Zacks, it has generated excess return over the market while keeping risk in line with the Russell 2000 since inception through 9/30/2021.
Why Small Caps?
Since January, 2000 small-cap stocks with capitalizations of $1 billion or less have proven to dramatically outperform their large-cap counterparts. With smaller companies, buyouts have historically been more common, rapid growth can be more achievable, and new opportunities can generally be acted upon with more dispatch.
Zacks Investment Management is a wholly owned subsidiary of Zacks Investment Research. Since 1992, we have blended the extensive research of our parent company with active, disciplined management of our clients' assets.
Why This Portfolio Manager?
Mitch Zacks is the firm's primary expert on quantitative investing and is a noted author and columnist on that subject. He holds a B.A. from Yale and an M.B.A. from the University of Chicago.
Why This Particular Fund?
We use a proprietary model that seeks to remove some of the riskiest positions from inclusion in the Fund. This enables us to invest in stocks we believe are of higher quality. Approximately 100 small-cap holdings are distilled by a careful selection process. As Mitch explains, "To truly outperform in the small-cap space, a series of prudent investments must be made, not just one or two big positions that paid off."
Objective: The Fund's primary investment objective is capital appreciation. The Fund's Strategy attempts to generate excess returns over the market by implementing a quantitative investment process to select small-cap stocks with strong potential for capital appreciation.
What Is the 6-Step Process for Selecting Stocks?
Ben and Mitch use this unique methodology to select stocks for the Fund:
- Start with the right universe by filtering down to 3,000 quality small-cap companies. Unlike funds with more limited research and smaller pools of stocks, we are able to detect a large universe of potential stocks.
- Employ the unbiased Zacks Rank performance model that has proven itself for more than 25 years. When analysts change their earnings estimates, large institutional investors tend to react slowly before investing, giving us the perfect opportunity to invest before the anticipated stock price movement. For decades the Zacks Rank performance model has helped institutional and individual investors manage their investments, and today our small-cap Fund seeks to capitalize on its power.
- Screen out stocks that are attracting high short interest from big institutional investors. When a stock has a high amount of short interest, it is likely that big institutional firms are betting the stock is overpriced. By eliminating stocks with high short activity, we seek to remove some of the riskiest positions from inclusion in the Fund.
- Use our unique Tactical Optimizer to keep risk characteristics in line with the Russell 2000. We have developed several rules for investing in small-cap stocks which allow us to truly seek positive alpha (return) without taking on additional risk.
- Run a final qualitative "Health Check" on the best quantitatively selected stocks. We believe that in order for a fund to produce consistent results, the core philosophy must be quantitative in nature, void of emotions or biases. However, before we purchase a position we have one last screen. This "Health Check" is performed by our experienced portfolio managers. They conduct one final qualitative analysis of each position to remove any questionable stocks from inclusion in the Fund.
- Keep a vigil to sell positions that are no longer appropriate for the Fund. Just as it is important to select the right stocks, we place equal importance on knowing when to sell a position. We regularly run our quantitative models to identify positions that are no longer appropriate for our fund, and then decisively remove them.
Where to Invest in the Fund?
The Zacks Small-Cap Core Mutual Fund (ZSCCX) is available to you through most brokerage firms including Charles Schwab, Fidelity, E*TRADE, Scottrade, and TD Ameritrade to name a few.
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Download attachments: Zacks Small Cap Core Prospectus
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An investment in the Fund is subject to risks, and you could lose money on your investment. There can be no assurance that the Fund will achieve their investment objectives. There is a risk that the value of the Fund's' stocks may fall due to general market and economic conditions and perceptions regarding the industries and or companies in which the Fund is invested.
The Fund is new and has a limited history of operations.
The Small-Cap Core Fund may invest in stocks of small companies, whose stocks may exhibit more erratic market and trading movements than larger stocks or the overall market. Small-cap companies can also be less liquid, making it more difficult for the managers to sell positions at the time they may wish.
A diversified portfolio does not protect against possible loss.
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Funds before investing. The Funds' prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 888.453.4003.
The Zacks Funds are distributed by IMST Distributors, LLC.