Is Principal Small Cap Growth I Institutional (PGRTX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Small Cap Growth fund? Starting with Principal Small Cap Growth I Institutional (PGRTX) is one possibility. PGRTX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
The world of Small Cap Growth funds is an area filled with options, such as PGRTX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.
History of Fund/Manager
Principal Financial Group is based in Des Moines, IA, and is the manager of PGRTX. The Principal Small Cap Growth I Institutional made its debut in September of 2002 and PGRTX has managed to accumulate roughly $161.12 million in assets, as of the most recently available information. Randy L. Welch is the fund's current manager and has held that role since June of 2009.
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 12.54%, and it sits 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 20.05%, 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 9.75%, the standard deviation of PGRTX over the past three years is 16.23%. Looking at the past 5 years, the fund's standard deviation is 16.72% compared to the category average of 10.13%. This makes the fund more volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, PGRTX lost 55.42% and underperformed its peer group by 2.38%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Investors should note that the fund has a 5-year beta of 1.25, 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. The fund has produced a negative alpha over the past 5 years of -1.05, which shows 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.
Right now, 96.38% of this mutual fund's holdings are stocks, which have an average market capitalization of $3.84 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
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, PGRTX is a no load fund. It has an expense ratio of 1.02% compared to the category average of 1.22%. PGRTX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Overall, Principal Small Cap Growth I Institutional ( PGRTX ) has a high Zacks Mutual Fund rank, similar performance, worse downside risk, and lower fees compared to its peers.
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 PGRTX too 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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