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Is Edgewood Growth Fund Retail (EGFFX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Large Cap Growth fund? Well, Edgewood Growth Fund Retail (EGFFX) would not be a good potential starting point right now. EGFFX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify EGFFX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Edgewood is based in Kansas City, MO, and is the manager of EGFFX. Edgewood Growth Fund Retail made its debut in March of 2006, and since then, EGFFX has accumulated about $425.17 million in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 15.09%, and it sits 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 14.81%, 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. EGFFX's standard deviation over the past three years is 13.06% compared to the category average of 10.13%. Looking at the past 5 years, the fund's standard deviation is 13.09% compared to the category average of 10.25%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In EGFFX's case, the fund lost 47.51% in the most recent bear market and outperformed its peer group by 1.27%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 1.12, so investors should note that it is hypothetically 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. EGFFX's 5-year performance has produced a positive alpha of 2.71, which means 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 primarily on equities that are traded in the United States.

Right now, 90.78% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $214.73 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Non-Durable
  3. Health
  4. Finance

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, EGFFX is a no load fund. It has an expense ratio of 1.40% compared to the category average of 1.10%. So, EGFFX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment has no minimum amount.

Bottom Line

Overall, Edgewood Growth Fund Retail ( EGFFX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.

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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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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.


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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