There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that may not be worth investigating is Edgewood Growth Fund Retail (EGFFX). EGFFX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
EGFFX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.
History of Fund/Manager
Edgewood is based in Kansas City, MO, and is the manager of EGFFX. Edgewood Growth Fund Retail made its debut in March of 2006, and since then, EGFFX has accumulated about $446.84 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 14.67%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 21.2%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. EGFFX's standard deviation over the past three years is 13.23% compared to the category average of 11.77%. The fund's standard deviation over the past 5 years is 13.85% compared to the category average of 11.57%. This makes the fund more volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, EGFFX lost 47.5% and outperformed its peer group by 1%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. EGFFX has a 5-year beta of 1.03, which means it is likely to be as volatile as the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. EGFFX has generated a positive alpha over the past five years of 3.29, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, EGFFX is a no load fund. It has an expense ratio of 1.40% compared to the category average of 1.08%. So, EGFFX is actually more expensive than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment has no minimum amount.
Overall, Edgewood Growth Fund Retail ( EGFFX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.
Don't stop here for your research on Large Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare EGFFX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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