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Is Hennessy Gas Utility Index Fund (GASFX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding an Index fund? Well, Hennessy Gas Utility Index Fund (GASFX - Free Report) would not be a good potential starting point right now. GASFX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Hennessy is based in Novato, CA, and is the manager of GASFX. Hennessy Gas Utility Index Fund made its debut in May of 1989, and since then, GASFX has accumulated about $732.41 million in assets, per the most up-to-date date available. Ryan C. Kelley is the fund's current manager and has held that role since March of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 4.28%, and it sits 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 6.93%, 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. The standard deviation of GASFX over the past three years is 9.64% compared to the category average of 7.28%. The fund's standard deviation over the past 5 years is 10.61% compared to the category average of 8.24%. 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, GASFX lost 38.57% and outperformed its peer group by 5%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.44, so it is likely going to be less 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. With a negative alpha of -0.7, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, GASFX is a no load fund. It has an expense ratio of 1.03% compared to the category average of 0.86%. GASFX is actually more expensive than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Hennessy Gas Utility Index Fund ( GASFX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, Hennessy Gas Utility Index Fund ( GASFX ) looks like a poor potential choice for investors right now.

Don't stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare GASFX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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