Markets

Is Royce Global Financial Services Service Class (RYFSX) a Strong Mutual Fund Pick Right Now?

Any investors hoping to find a Sector - Finance fund might consider looking past Royce Global Financial Services Service Class (RYFSX). RYFSX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

RYFSX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.

History of Fund/Manager

Royce Funds is based in New York, NY, and is the manager of RYFSX. Royce Global Financial Services Service Class debuted in January of 2004. Since then, RYFSX has accumulated assets of about $37.83 million, according to the most recently available information. The fund is currently managed by Charles M. Royce who has been in charge of the fund since January of 2004.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. RYFSX has a 5-year annualized total return of 5.88% 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 7.74%, 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. RYFSX's standard deviation over the past three years is 12.91% compared to the category average of 15.48%. Over the past 5 years, the standard deviation of the fund is 12% compared to the category average of 14.38%. This makes the fund less 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. RYFSX lost 51.21% in the most recent bear market and outperformed its peer group by 9.42%. This could mean that the fund is a better choice than comparable funds during a bear market.

Nevertheless, with a 5-year beta of 0.98, the fund is likely to be as volatile as the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -4.35, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, RYFSX is a no load fund. It has an expense ratio of 1.49% compared to the category average of 1.44%. So, RYFSX is actually more expensive than its peers from a cost perspective.

This fund requires a minimum initial investment of $2,000, and each subsequent investment should be at least $50.

Bottom Line

Overall, Royce Global Financial Services Service Class ( RYFSX ) 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.

Don't stop here for your research on Sector - Finance funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare RYFSX to its peers 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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