Waddell & Reed Advisor Small Cap Fund

Scorecard
3 / 5 Stars
Lipper
2 3 3 1 1
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
2 / 5 Stars
TheStreet.com
C+ (Hold)

U.S. News evaluated 215 Small Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 33.39 percent over the past year, 12.83 percent over the past three years, 27.01 percent over the past five years, and 9.29 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 2.1%
1 Year 33.4%
3 Years (Annualized) 12.8%
5 Years (Annualized) 27.0%
10 Years (Annualized) 9.3%

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Summary

Waddell & Reed Small Cap is getting better with time.

As of March 05, 2014, the fund has assets totaling almost $903.77 million invested in 94 different holdings. Its portfolio consists of shares of small companies.

Recently, the fund has done a fine job of separating itself from the pack. It finished 2010 near the top of its category. This trend is becoming par for the course for this fund, which has been steadily improving over the years. Lately, the fund has been overweight in the software and business-services sectors. In the business-services category, the fund holds a large position in Portfolio Recovery Associates, a debt collection firm that has posted a hefty return so far this year. For the fund, this 2010’s outperformance has coincided with a change at the top. Manager Timothy Miller took over the portfolio in April 2010. Miller was previously a manager for Invesco. The fund has returned 33.39 percent over the past year and 12.83 percent over the past three years.

Overall, this fund looks a lot like Ivy Small Cap Growth, which makes sense since Waddell & Reed owns the Ivy funds. Aside from this fund, Miller took over Ivy Small Cap Growth earlier this year. Currently, the two funds have nearly identical portfolios, and over the past several years, their returns have been quite similar. For price-conscious investors, though, the Ivy fund is a bit cheaper to own. Waddell & Reed Small Cap has returned 27.01 percent over the past five years and 9.29 percent over the past decade.

Investment Strategy

According to the prospectus: “The fund emphasizes relatively new or unseasoned companies in their early stages of development, or smaller companies positioned in new or emerging industries where there is opportunity for rapid growth. In selecting securities for the fund, WRIMCO, the fund’s investment manager, utilizes a bottom-up stock picking process that focuses on companies it believes have long-term growth potential with superior financial characteristics."

Role in Portfolio

This fund could lend support to a well-balanced portfolio.

Management

Timothy Miller has managed the fund since April 2010.

Fees

Waddell & Reed Advisor Small Cap Fund has an expense ratio of 2.70 percent.

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Risk

Like all stock funds, this one comes with some risks. Additionally, small-cap stocks can be more volatile than the broader market.

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