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Is TIAA-CREF Large Cap Value Premier (TRCPX) a Strong Mutual Fund Pick Right Now?

If investors are looking at the Large Cap Value fund category, TIAA-CREF Large Cap Value Premier (TRCPX) could be a potential option. TRCPX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Large Cap Value mutual funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value; this value investing strategy often leads to low P/E ratios and high dividend yields, though growth levels are often curtailed. The high-growth opportunity of these funds are slowed even further, as large-cap securities are generally in stable industries with low to moderate growth prospects. Therefore, Large Cap Value funds are usually more appealing to investors who are interested in a stable income stream.

History of Fund/Manager

TIAA-CREF is based in Boston, MA, and is the manager of TRCPX. Since TIAA-CREF Large Cap Value Premier made its debut in September of 2009, TRCPX has garnered more than $251.92 million in assets. The fund's current manager, Thomas Kolefas, has been in charge of the fund since September of 2009.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 6.5%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.88%, which places it in the bottom 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. TRCPX's standard deviation over the past three years is 11.01% compared to the category average of 8.84%. The fund's standard deviation over the past 5 years is 11.26% compared to the category average of 9.06%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.05, which means 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. With a negative alpha of -4.77, managers in this portfolio find it difficult to pick 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.

The mutual fund currently has 91.35% of its holdings in stocks, which have an average market capitalization of $90.92 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology
  3. Other
  4. Industrial Cyclical

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, TRCPX is a no load fund. It has an expense ratio of 0.55% compared to the category average of 1.03%. From a cost perspective, TRCPX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, TIAA-CREF Large Cap Value Premier ( TRCPX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, TIAA-CREF Large Cap Value Premier ( TRCPX ) looks like a great potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Value, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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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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