Small Cap Blend fund seekers may want to consider taking a look at Hodges Small Cap Fund Institutional Class (HDSIX). HDSIX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
HDSIX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
History of Fund/Manager
Hodges Capital is based in Dallas, TX, and is the manager of HDSIX. The Hodges Small Cap Fund Institutional Class made its debut in December of 2008 and HDSIX has managed to accumulate roughly $58.86 million in assets, as of the most recently available information. The fund’s current manager is a team of investment professionals.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 15.12%, 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 13.59%, 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. HDSIX’s standard deviation over the past three years is 32.62% compared to the category average of 20.37%. Looking at the past 5 years, the fund’s standard deviation is 26.44% compared to the category average of 16.8%. 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 1.54, 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. HDSIX’s 5-year performance has produced a negative alpha of -7.65, which means managers in this portfolio find it difficult to pick 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, HDSIX is a no load fund. It has an expense ratio of 1.14% compared to the category average of 1.11%. Looking at the fund from a cost perspective, HDSIX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment needs to be at $100.
Overall, Hodges Small Cap Fund Institutional Class ( HDSIX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a somewhat average choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds 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.