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Is PRIMECAP Odyssey Stock Fund (POSKX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
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If investors are looking at the Large Cap Growth fund category, make sure to pass over PRIMECAP Odyssey Stock Fund (POSKX). POSKX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

POSKX 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

Primecap Odyssey is responsible for POSKX, and the company is based out of Pasadena, CA. PRIMECAP Odyssey Stock Fund made its debut in November of 2004, and since then, POSKX has accumulated about $10.74 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.96%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.45%, 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. The standard deviation of POSKX over the past three years is 11.73% compared to the category average of 10.58%. The fund's standard deviation over the past 5 years is 10.49% compared to the category average of 10.32%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In POSKX's case, the fund lost 45.4% in the most recent bear market and underperformed comparable funds by 4.27%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Nevertheless, with a 5-year beta of 1.02, the fund is likely to be as volatile as the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. POSKX has generated a positive alpha over the past five years of 0.55, demonstrating 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 primarily on equities that are traded in the United States.

Currently, this mutual fund is holding 93.43% stock in stocks, with an average market capitalization of $96.94 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Industrial Cyclical
  3. Finance
  4. Health

Turnover is 6%, which means, on average, the fund makes fewer trades than the average comparable fund.

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, POSKX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1%. So, POSKX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $2,000 and that each subsequent investment needs to be at $100.

Bottom Line

Overall, PRIMECAP Odyssey Stock Fund ( POSKX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, PRIMECAP Odyssey Stock Fund ( POSKX ) looks like a somewhat weak choice for investors right now.

This could just be the start of your research on POSKXin the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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