Any investors hoping to find an Allocation Balanced fund could think about starting with Direxion Monthly S&P 500 Bull 2X Investor (DXSLX Quick QuoteDXSLX - Free Report) . DXSLX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

DXSLX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

History of Fund/Manager

Direxion Funds is based in Newton, MA, and is the manager of DXSLX. Since Direxion Monthly S&P 500 Bull 2X Investor made its debut in May of 2006, DXSLX has garnered more than $72.60 million in assets. The fund's current manager, Tony Ng, has been in charge of the fund since May of 2006.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 26.86%, and it sits 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 18.58%, 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 7.04%, the standard deviation of DXSLX over the past three years is 20.27%. Over the past 5 years, the standard deviation of the fund is 19.59% compared to the category average of 6.94%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, DXSLX lost 89.39% and underperformed comparable funds by 53.19%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 2, which means 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. DXSLX has generated a negative alpha over the past five years of -2.32, demonstrating 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 largely on equities that are traded in the United States.

Currently, this mutual fund is holding 97.91% stock in stocks and it has a negligible amount of assets in foreign securities.