Is Harbor Capital Appreciation Institutional (HACAX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Large Cap Growth funds, a place to start could be Harbor Capital Appreciation Institutional (HACAX). HACAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

HACAX 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

Harbor Funds is responsible for HACAX, and the company is based out of Chicago, IL. Harbor Capital Appreciation Institutional debuted in December of 1987. Since then, HACAX has accumulated assets of about $23.29 billion, according to the most recently available information. The fund's current manager, Spiros Segalas, has been in charge of the fund since May of 1990.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 18.18%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 18.73%, 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. HACAX's standard deviation over the past three years is 12.65% compared to the category average of 9.49%. The fund's standard deviation over the past 5 years is 12.52% compared to the category average of 9.2%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. HACAX lost 43.95% in the most recent bear market and underperformed comparable funds by 5.02%. This means that the fund could possibly be a worse choice than its peers during a down 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. HACAX has a 5-year beta of 1.1, which means it is likely to be more volatile than 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. The fund has produced a positive alpha over the past 5 years of 2.22, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

The mutual fund currently has 95.79% of its holdings in stocks, and these companies have an average market capitalization of $256.09 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology

2. Non-Durable

Turnover is 38%, which means, on average, the fund makes fewer trades than its comparable peers.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, HACAX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1.10%. From a cost perspective, HACAX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment has no minimum amount.

Bottom Line

Overall, Harbor Capital Appreciation Institutional ( HACAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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