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Is Hodges Small Cap Fund Institutional Class (HDSIX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Mutual Fund Equity Report fund? Hodges Small Cap Fund Institutional Class (HDSIX - Free Report) is a potential starting point. HDSIX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

Hodges Capital is based in Dallas, TX, and is the manager of HDSIX. Hodges Small Cap Fund Institutional Class debuted in December of 2008. Since then, HDSIX has accumulated assets of about $34.30 million, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 4.97%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 20.12%, which places it in the top 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. The standard deviation of HDSIX over the past three years is 26.82% compared to the category average of 17.57%. The fund's standard deviation over the past 5 years is 30.72% compared to the category average of 19.4%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.45, so investors should note that 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. The fund has produced a negative alpha over the past 5 years of -7.12, which shows that 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.

Currently, this mutual fund is holding 87.26% in stocks, which have an average market capitalization of $4.57 billion. The fund has the heaviest exposure to the following market sectors:

  • Retail Trade
  • Industrial Cyclical
  • Energy
  • Technology
Turnover is about 67%, so those in charge of the fund make more trades per year than the comparable average.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, HDSIX is a no load fund. It has an expense ratio of 1.15% compared to the category average of 1.06%. HDSIX is actually more expensive than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment needs to be at $100

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

Bottom Line

Overall, even with its comparatively strong performance, worse downside risk, and higher fees, Hodges Small Cap Fund Institutional Class ( HDSIX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.

Don't stop here for your research on Mutual Fund Equity Report 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 HDSIX to its peers as well 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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