Is Meridian Contrarian Legacy (MVALX) a Strong Mutual Fund Pick Right Now?

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If you’ve been stuck searching for Mutual Fund Equity Report funds, you might want to consider passing on by Meridian Contrarian Legacy (MVALX) as a possibility. MVALX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

– Zacks

History of Fund/Manager

Meridian is based in Providence, RI, and is the manager of MVALX. Meridian Contrarian Legacy made its debut in February of 1994, and since then, MVALX has accumulated about $730.71 million in assets, per the most up-to-date date available. The fund is currently managed by James England who has been in charge of the fund since December of 2001.

Performance

Investors naturally seek funds with strong performance. MVALX has a 5-year annualized total return of 18.54% 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 19.46%, 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. Over the past three years, MVALX’s standard deviation comes in at 25.01%, compared to the category average of 17.73%. Over the past 5 years, the standard deviation of the fund is 20.76% compared to the category average of 14.51%. 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 1.21, so it is likely going to be 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 -3.02. This means that 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 largely on equities that are traded in the United States.

The mutual fund currently has 75.37% of its holdings in stocks, and these companies have an average market capitalization of $22.11 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Other
  4. Industrial Cyclical

Turnover is 72%, which means, on average, the fund makes more traders than comparable funds in a given year.

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, MVALX is a no load fund. It has an expense ratio of 1.11% compared to the category average of 1.25%. Looking at the fund from a cost perspective, MVALX is actually cheaper than its peers.

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, Meridian Contrarian Legacy ( MVALX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Meridian Contrarian Legacy ( MVALX ) looks like a somewhat weak choice for investors right now.

Want even more information about MVALX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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