Is Baron Asset Fund Retail (BARAX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Mid Cap Growth funds, you might want to consider passing on by Baron Asset Fund Retail (BARAX) as a possibility. BARAX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes BARAX as Mid Cap Growth, a segment packed with options. Mid Cap Growth mutual funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. A firm is typically considered to be a growth stock if it consistently posts impressive sales and/or earnings growth.
History of Fund/Manager
Baron is responsible for BARAX, and the company is based out of New York, NY. The Baron Asset Fund Retail made its debut in June of 1987 and BARAX has managed to accumulate roughly $2.16 billion in assets, as of the most recently available information. The fund's current manager, Andrew Peck, has been in charge of the fund since January of 2008.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 12.25%, and is in the top 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 19.62%, 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. Compared to the category average of 11.38%, the standard deviation of BARAX over the past three years is 14%. The standard deviation of the fund over the past 5 years is 13.49% compared to the category average of 11.19%. This makes the fund more volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In BARAX's case, the fund lost 53.49% in the most recent bear market and underperformed its peer group by 2%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Even still, the fund has a 5-year beta of 1.02, so investors should note that it is hypothetically as volatile as 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. BARAX has generated a positive alpha over the past five years of 1.31, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, BARAX is a no load fund. It has an expense ratio of 1.30% compared to the category average of 1.22%. Looking at the fund from a cost perspective, BARAX is actually more expensive than its peers.
This fund requires a minimum initial investment of $2,000, while there is no minimum for each subsequent investment.
Overall, Baron Asset Fund Retail ( BARAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Baron Asset Fund Retail ( BARAX ) looks like a poor potential choice for investors right now.
Your research on the Mid 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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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.