Is Invesco Equally-Weighted S&P 500 A (VADAX) a Strong Mutual Fund Pick Right Now?

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If you’ve been stuck searching for Large Cap Blend funds, consider Invesco Equally-Weighted S&P 500 A (VADAX) as a possibility. VADAX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Load Error

Objective

We note that VADAX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a ” buy and hold ” mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.

History of Fund/Manager

Invesco is based in Kansas City, MO, and is the manager of VADAX. Since Invesco Equally-Weighted S&P 500 A made its debut in July of 1997, VADAX has garnered more than $2.86 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 13.38%, and is in the bottom 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 12.67%, 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. VADAX’s standard deviation over the past three years is 21.71% compared to the category average of 15.96%. The fund’s standard deviation over the past 5 years is 17.33% compared to the category average of 13.15%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.09, the fund is likely to be more volatile than the market average. 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. With a negative alpha of -4.11, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

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 principally on equities that are traded in the United States.

Currently, this mutual fund is holding 91.81% stock in stocks, with an average market capitalization of $69.48 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology
  3. Industrial Cyclical
  4. Non-Durable

Turnover is about 26%, so those in charge of the fund make fewer trades than comparable funds.

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, VADAX is a load fund. It has an expense ratio of 0.53% compared to the category average of 0.95%. VADAX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, Invesco Equally-Weighted S&P 500 A ( VADAX ) 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 Large Cap Blend 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. 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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