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Is ClearBridge Aggressive Growth A (SHRAX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Large Cap Growth fund might consider looking past ClearBridge Aggressive Growth A (SHRAX - Free Report) . SHRAX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

SHRAX 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

Legg Mason is responsible for SHRAX, and the company is based out of Baltimore, MD. Since ClearBridge Aggressive Growth A made its debut in October of 1983, SHRAX has garnered more than $5.51 billion in assets. The fund's current manager, Richard Freeman, has been in charge of the fund since October of 1983.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 13.85%, and it sits in the bottom 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 4.26%, 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. Compared to the category average of 9.07%, the standard deviation of SHRAX over the past three years is 12.98%. The standard deviation of the fund over the past 5 years is 12.3% compared to the category average of 10.91%. 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. SHRAX lost 51.89% in the most recent bear market and underperformed its peer group by 3.01%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Even still, the fund has a 5-year beta of 1.12, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a negative alpha of -2.52. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

Right now, 99.72% of this mutual fund's holdings are stocks, which have an average market capitalization of $66.85 billion. The fund has the heaviest exposure to the following market sectors:

  1. Health
  2. Technology
  3. Finance
  4. Non-Durable

Turnover is about 2%, so those in charge of the fund make fewer trades than the average comparable fund.

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, SHRAX is a load fund. It has an expense ratio of 1.13% compared to the category average of 1.14%. Looking at the fund from a cost perspective, SHRAX is actually cheaper than its peers.

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, ClearBridge Aggressive Growth A SHRAX has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

This could just be the start of your research on SHRAX 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. 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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