SBPYX - Legg Mason ClearBridge Small Cap Gr I

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Legg Mason ClearBridge Small Cap Gr I (SBPYX)
Expense Ratio: 0.85%
Expected Lifetime Fees: $25,708.96

The Legg Mason ClearBridge Small Cap Gr I fund (SBPYX) is a Small Growth fund started on 11/1/2004 and has $842.10 million in assets under management. The current manager has been running Legg Mason ClearBridge Small Cap Gr I since 03/25/2007. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard Small Cap Growth ETF (VBK)
Expense Ratio: 0.10%
Expected Lifetime Fees: $3,271.86

The Vanguard Small Cap Growth ETF (VBK) is an Exchange Traded Fund. It is a "basket" of securities that index the Small Growth investment strategy and is an alternative to a Small Growth mutual fund. Fees are very low compared to a comparable mutual fund like Legg Mason ClearBridge Small Cap Gr I because computers automatically manage the stocks.

The Following Small Growth Funds Have Lower Fees Than Legg Mason ClearBridge Small Cap Gr I (SBPYX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
AQR Small Cap Momentum Fund Class L ASMOX 121.0% 119 0.66%
BlackRock Small Cap Growth Equity Instl PSGIX 141.0% 1,300 0.80%
Eagle Small Cap Growth I HSIIX 36.0% 2,400 0.82%
Hartford Small Company HLS IA HIASX 99.0% 1,300 0.71%
Hartford SmallCap Growth HLS IA HISCX 62.0% 514 0.67%
Invesco Small Cap Growth I GTSVX 38.0% 1,700 0.83%
Janus Triton Fund Class I JSMGX 42.0% 3,000 0.76%
Lord Abbett Developing Growth I LADYX 137.0% 2,300 0.74%
Northern Small Cap Core NSGRX 12.3% 166 0.75%
Pioneer Growth Opportunities Y GROYX 112.0% 538 0.75%
Prudential Jennison Small Company Fund Class Q PJSQX 44.0% 2,700 0.72%
Sentinel Small Company I SIGWX 37.0% 2,300 0.68%
T. Rowe Price New Horizons PRNHX 43.7% 9,000 0.81%
Vanguard Explorer Adm VEXRX 89.0% 8,900 0.34%
Vanguard Explorer Inv VEXPX 89.0% 8,900 0.50%
Vanguard Small Cap Growth Index Instl VSGIX 40.0% 8,500 0.08%
Vanguard Small Cap Growth Index Inv VISGX 40.0% 8,500 0.24%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.