Large Cap Growth fund seekers should consider taking a look at MFS Growth Fund A (MFEGX). MFEGX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
We classify MFEGX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.
History of Fund/Manager
MFEGX finds itself in the MFS family, based out of Boston, MA. The MFS Growth Fund A made its debut in December of 1986 and MFEGX has managed to accumulate roughly $9.09 billion in assets, as of the most recently available information. The fund’s current manager, Eric B. Fischman, has been in charge of the fund since April of 2002.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 22.69%, and is in the middle 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 23%, which places it in the middle 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 MFEGX over the past three years is 18.11% compared to the category average of 15.54%. The standard deviation of the fund over the past 5 years is 15.07% compared to the category average of 12.89%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 0.92, so investors should note that it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. MFEGX’s 5-year performance has produced a positive alpha of 5.69, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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 mostly on equities that are traded in the United States.
Currently, this mutual fund is holding 76.43% stock in stocks, with an average market capitalization of $453.73 billion. The fund has the heaviest exposure to the following market sectors:
- Retail Trade
Turnover is 27%, which means, on average, the fund makes fewer trades than its comparable peers.
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, MFEGX is a load fund. It has an expense ratio of 0.86% compared to the category average of 1.02%. So, MFEGX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.
Overall, MFS Growth Fund A ( MFEGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, MFS Growth Fund A ( MFEGX ) 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. 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.