Technology

Is American Century Select Investor (TWCIX) a Strong Mutual Fund Pick Right Now?

If you're looking for a Large Cap Growth fund category, then a potential option is American Century Select Investor (TWCIX). TWCIX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

TWCIX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

American Century is responsible for TWCIX, and the company is based out of Kansas City, MO. American Century Select Investor debuted in December of 1961. Since then, TWCIX has accumulated assets of about $3.04 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. TWCIX has a 5-year annualized total return of 13.9% and it sits in the top 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 17.73%, 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. Compared to the category average of 9.5%, the standard deviation of TWCIX over the past three years is 12.27%. The standard deviation of the fund over the past 5 years is 12.28% compared to the category average of 9.84%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, TWCIX lost 47.71% and outperformed its peer group by 1.15%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 1.04, so it is likely going to be more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a positive alpha of 1.75, managers in this portfolio are skilled in picking 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.

The mutual fund currently has 83.12% of its holdings in stocks, and these companies have an average market capitalization of $286.10 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other
  3. Finance
  4. Retail Trade

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, TWCIX is a no load fund. It has an expense ratio of 0.97% compared to the category average of 1.06%. From a cost perspective, TWCIX is actually cheaper than its peers.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Century Select Investor ( TWCIX ) has a neutral Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

Your research on the Large Cap Growth 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 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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