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Is Principal Large Cap Growth I Institutional (PLGIX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Large Cap Growth funds, consider Principal Large Cap Growth I Institutional (PLGIX - Free Report) as a possibility. PLGIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify PLGIX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Principal Financial Group is responsible for PLGIX, and the company is based out of Des Moines, IA. Principal Large Cap Growth I Institutional debuted in November of 2000. Since then, PLGIX has accumulated assets of about $2.20 billion, according to the most recently available information. Randy L. Welch is the fund's current manager and has held that role since June of 2009.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.25%, and it sits in the top 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 17.39%, 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. Over the past three years, PLGIX's standard deviation comes in at 13.41%, compared to the category average of 9.29%. Looking at the past 5 years, the fund's standard deviation is 13.24% compared to the category average of 9.63%. 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 PLGIX's case, the fund lost 50.94% in the most recent bear market and underperformed its peer group by 2.08%. 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 1.05, which means 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. PLGIX's 5-year performance has produced a positive alpha of 3, which means managers in this portfolio are skilled in picking 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 principally on equities that are traded in the United States.

This fund is currently holding about 90.23% stock in stocks, with an average market capitalization of $236.92 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
Turnover is 34.8%, which means, on average, the fund makes fewer trades than its comparable peers.

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, PLGIX is a no load fund. It has an expense ratio of 0.67% compared to the category average of 1.06%. PLGIX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, Principal Large Cap Growth I Institutional ( PLGIX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

Want even more information about PLGIX? 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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