Technology

Is Meridian Contrarian Legacy (MVALX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Small Cap Value fund? Meridian Contrarian Legacy (MVALX) is a potential starting point. MVALX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

MVALX is one of many Small Cap Value funds to choose from. Small Cap Value mutual funds typically invest in companies with market caps under $2 billion. These funds represent value because they offer more bang for an owner's buck, often demonstrated by lower P/E Ratios, high dividend yields, and better-than-average price-to-sales ratios.

History of Fund/Manager

Meridian is based in Providence, RI, and is the manager of MVALX. The Meridian Contrarian Legacy made its debut in February of 1994 and MVALX has managed to accumulate roughly $538.85 million in assets, as of the most recently available information. James England is the fund's current manager and has held that role since December of 2001.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 10.69%, and is 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 16.18%, 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 11.14%, the standard deviation of MVALX over the past three years is 14.15%. The fund's standard deviation over the past 5 years is 14.21% compared to the category average of 11.32%. 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. MVALX lost 44.06% in the most recent bear market and outperformed its peer group by 6.7%. This means that the fund could possibly be a better choice than its peers during a down market environment.

Investors should note that the fund has a 5-year beta of 1.13, 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 -1.85, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, MVALX is a no load fund. It has an expense ratio of 1.12% compared to the category average of 1.25%. MVALX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

Overall, Meridian Contrarian Legacy ( MVALX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Value, make sure to go to www.zacks.com/funds/mutual-funds 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.

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