If you have been looking for Mutual Fund Equity Report funds, it would not be wise to start your search with Hodges Small Cap Fund Institutional Class (HDSIX). HDSIX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
HDSIX finds itself in the Hodges Capital family, based out of Dallas, TX. Hodges Small Cap Fund Institutional Class debuted in December of 2008. Since then, HDSIX has accumulated assets of about $50.91 million, according to the most recently available information. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 10.8%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 14.79%, 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 HDSIX over the past three years is 32.29% compared to the category average of 19.9%. The standard deviation of the fund over the past 5 years is 26.12% compared to the category average of 16.62%. This makes the fund more volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. HDSIX has a 5-year beta of 1.46, which means it is likely to be more volatile than the market average. 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. Over the past 5 years, the fund has a negative alpha of -11.07. 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 principally on equities that are traded in the United States.
As of the last filing date, the mutual fund has 78.88% of its assets in stocks, with an average market capitalization of $5.49 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is about 124%, so those in charge of the fund make more traders than comparable funds in a given year.
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, HDSIX is a no load fund. It has an expense ratio of 1.10% compared to the category average of 1.10%. From a cost perspective, HDSIX is actually on par with its peers.
Investors need to be aware that with this product, the minimum initial investment is $1 million; each subsequent investment needs to be at least $100.
Overall, Hodges Small Cap Fund Institutional Class ( HDSIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and on par fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Mutual Fund Equity Report area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into HDSIX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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