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Is State Farm Growth Fund (STFGX) a Strong Mutual Fund Pick Right Now?

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Have you been searching for a Large Cap Blend fund? You might want to begin with State Farm Growth Fund (STFGX - Free Report) . STFGX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

STFGX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.

History of Fund/Manager

State Farm is based in Bloomington, IL, and is the manager of STFGX. The State Farm Growth Fund made its debut in March of 1975 and STFGX has managed to accumulate roughly $4.99 billion in assets, as of the most recently available information. The fund is currently managed by Paul Eckley who has been in charge of the fund since January of 1991.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 8.43%, and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 10.02%, which places it in the middle 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. The standard deviation of STFGX over the past three years is 8.6% compared to the category average of 10.05%. Over the past 5 years, the standard deviation of the fund is 9.3% compared to the category average of 10.52%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In STFGX's case, the fund lost 42.39% in the most recent bear market and outperformed its peer group by 7.21%. This could mean that the fund is a better choice than comparable funds during a bear market.

Nevertheless, with a 5-year beta of 0.87, the fund is likely to be less volatile than the market average. 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. With a negative alpha of -1.18, 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, STFGX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.98%. From a cost perspective, STFGX is actually cheaper than its peers.

This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $50.

Bottom Line

Overall, State Farm Growth Fund ( STFGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

Want even more information about STFGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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