Is MassMutual Select Mid Cap Growth I (MEFZX) a Strong Mutual Fund Pick Right Now?

This article was originally published on this site

Mid Cap Growth fund seekers should consider taking a look at MassMutual Select Mid Cap Growth I (MEFZX). MEFZX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that MEFZX is a Mid Cap Growth fund, and this area is also loaded with many different options. Companies are usually considered growth stocks when they consistently report notable sales and/or earnings growth. Thus, Mid Cap Growth funds pick stocks–usually companies with a market cap between $2 billion and $10 billion–that demonstrate extensive growth opportunities for investors compared to their peers.

History of Fund/Manager

MassMutual is based in Springfield, MA, and is the manager of MEFZX. MassMutual Select Mid Cap Growth I made its debut in November of 2010, and since then, MEFZX has accumulated about $6.19 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. MEFZX has a 5-year annualized total return of 18.7% and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.09%, which places it in the bottom 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 MEFZX over the past three years is 20.92% compared to the category average of 16.01%. The standard deviation of the fund over the past 5 years is 17.05% compared to the category average of 13.39%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.08, so it is likely going to be more volatile than the market at large. 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. MEFZX’s 5-year performance has produced a positive alpha of 0.7, which means 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 largely on equities that are traded in the United States.

As of the last filing date, the mutual fund has 77.39% of its assets in stocks, which have an average market capitalization of $25.02 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Industrial Cyclical

  3. Retail Trade

  4. Health

Turnover is 37%, which means this fund makes fewer trades than the average comparable fund.

Expenses

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, MEFZX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 1.18%. Looking at the fund from a cost perspective, MEFZX is actually cheaper than its peers.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Overall, MassMutual Select Mid Cap Growth I ( MEFZX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

Your research on the Mid Cap Growth segment doesn’t have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research