Is MFS Growth Fund A (MFEGX) a Strong Mutual Fund Pick Right Now?

If you've been stuck searching for Large Cap Growth funds, consider MFS Growth Fund A (MFEGX) as a possibility. MFEGX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

MFEGX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

MFS is based in Boston, MA, and is the manager of MFEGX. MFS Growth Fund A made its debut in December of 1986, and since then, MFEGX has accumulated about $10.30 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. MFEGX has a 5-year annualized total return of 9.3%, 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 18.77%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 11.61%, the standard deviation of MFEGX over the past three years is 15.71%. The standard deviation of the fund over the past 5 years is 18.55% compared to the category average of 13.6%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.13, 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. MFEGX's 5-year performance has produced a negative alpha of -4.39, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 76.91% of its holdings in stocks, which have an average market capitalization of $620.24 billion. The fund has the heaviest exposure to the following market sectors:

• Technology

With turnover at about 36%, this fund makes fewer trades than its comparable peers.

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, MFEGX is a load fund. It has an expense ratio of 0.86% compared to the category average of 0.94%. So, MFEGX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, MFS Growth Fund A ( MFEGX ) 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.

This could just be the start of your research on MFEGX in the Large Cap Growth category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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