This story originally appeared on Zacks
If you have been looking for Mutual Fund Equity Report funds, a place to start could be Ariel Fund Investor (ARGFX). ARGFX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Ariel is based in Chicago, IL, and is the manager of ARGFX. Since Ariel Fund Investor made its debut in November of 1986, ARGFX has garnered more than $1.76 billion in assets. The fund’s current manager is a team of investment professionals.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 11.92%, 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 14.28%, 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 ARGFX over the past three years is 27.85% compared to the category average of 19.55%. Looking at the past 5 years, the fund’s standard deviation is 22.76% compared to the category average of 16.15%. This makes the fund more volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 1.33, which means it is hypothetically more volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -8.93. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Exploring 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.
The mutual fund currently has 83.58% of its holdings in stocks, which have an average market capitalization of $11.72 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
With turnover at about 24%, this fund makes fewer trades than comparable funds.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, ARGFX is a no load fund. It has an expense ratio of 1% compared to the category average of 1.11%. So, ARGFX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $100.
Overall, Ariel Fund Investor ( ARGFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on ARGFXin the Mutual Fund Equity Report 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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