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Is MFS Technology Fund A (MTCAX) a Strong Mutual Fund Pick Right Now?
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Having trouble finding a Sector - Tech fund? Well, MFS Technology Fund A (MTCAX - Free Report) would not be a good potential starting point right now. MTCAX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that MTCAX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.
History of Fund/Manager
MTCAX is a part of the MFS family of funds, a company based out of Boston, MA. MFS Technology Fund A made its debut in January of 1997, and since then, MTCAX has accumulated about $442.13 million in assets, per the most up-to-date date available. The fund's current manager, Matthew D. Sabel, has been in charge of the fund since May of 2011.
Performance
Of course, investors look for strong performance in funds. MTCAX has a 5-year annualized total return of 17.09% and is 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 21.02%, 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. MTCAX's standard deviation over the past three years is 15.66% compared to the category average of 9.65%. Looking at the past 5 years, the fund's standard deviation is 15.32% compared to the category average of 10.01%. This makes the fund more 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 the most recent bear market, MTCAX lost 55.65% and underperformed comparable funds by 2.33%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.13, which means it is hypothetically more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. MTCAX has generated a positive alpha over the past five years of 6.06, demonstrating that managers in this portfolio are skilled in picking 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 95.11% stock in stocks, which have an average market capitalization of $296.02 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Retail Trade
With turnover at about 32%, this fund makes fewer trades than comparable funds.
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, MTCAX is a load fund. It has an expense ratio of 1.17% compared to the category average of 1.31%. So, MTCAX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, MFS Technology Fund A ( MTCAX ) has a low Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
This could just be the start of your research on MTCAXin the Sector - Tech 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Is MFS Technology Fund A (MTCAX) a Strong Mutual Fund Pick Right Now?
Having trouble finding a Sector - Tech fund? Well, MFS Technology Fund A (MTCAX - Free Report) would not be a good potential starting point right now. MTCAX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that MTCAX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.
History of Fund/Manager
MTCAX is a part of the MFS family of funds, a company based out of Boston, MA. MFS Technology Fund A made its debut in January of 1997, and since then, MTCAX has accumulated about $442.13 million in assets, per the most up-to-date date available. The fund's current manager, Matthew D. Sabel, has been in charge of the fund since May of 2011.
Performance
Of course, investors look for strong performance in funds. MTCAX has a 5-year annualized total return of 17.09% and is 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 21.02%, 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. MTCAX's standard deviation over the past three years is 15.66% compared to the category average of 9.65%. Looking at the past 5 years, the fund's standard deviation is 15.32% compared to the category average of 10.01%. This makes the fund more 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 the most recent bear market, MTCAX lost 55.65% and underperformed comparable funds by 2.33%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.13, which means it is hypothetically more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. MTCAX has generated a positive alpha over the past five years of 6.06, demonstrating that managers in this portfolio are skilled in picking 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 95.11% stock in stocks, which have an average market capitalization of $296.02 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Retail Trade
With turnover at about 32%, this fund makes fewer trades than comparable funds.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, MTCAX is a load fund. It has an expense ratio of 1.17% compared to the category average of 1.31%. So, MTCAX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, MFS Technology Fund A ( MTCAX ) has a low Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
This could just be the start of your research on MTCAXin the Sector - Tech 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.