Technology

Is Hartford Small Company HLS IB (HDMBX) a Strong Mutual Fund Pick Right Now?

Small Cap Growth fund seekers should consider taking a look at Hartford Small Company HLS IB (HDMBX). HDMBX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

HDMBX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.

History of Fund/Manager

Hartford is responsible for HDMBX, and the company is based out of Woodbury, MN. Hartford Small Company HLS IB made its debut in October of 2002, and since then, HDMBX has accumulated about $47.88 million in assets, per the most up-to-date date available. Steven C. Angeli is the fund's current manager and has held that role since October of 2002.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 7.94%, and is in the middle 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 13.89%, 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, HDMBX's standard deviation comes in at 18.4%, compared to the category average of 13.41%. Looking at the past 5 years, the fund's standard deviation is 17.64% compared to the category average of 13.25%. 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, HDMBX lost 52.82% and outperformed its peer group by 0%. This means that the fund could possibly be an on par choice than its peers during a down market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. HDMBX has a 5-year beta of 1.26, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -4.31, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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 mostly on equities that are traded in the United States.

Right now, 94.01% of this mutual fund's holdings are stocks, with an average market capitalization of $4.25 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Health
  3. Other
  4. Finance

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, HDMBX is a no load fund. It has an expense ratio of 1.04% compared to the category average of 1.25%. From a cost perspective, HDMBX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Hartford Small Company HLS IB ( HDMBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

For additional information on the Small Cap Growth 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 HDMBX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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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.