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Is MassMutual Select Small Cap Growth Equity R5 (MSGSX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Small Cap Growth fund could think about starting with MassMutual Select Small Cap Growth Equity R5 (MSGSX - Free Report) . MSGSX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

MSGSX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.

History of Fund/Manager

MassMutual is based in Springfield, MA, and is the manager of MSGSX. MassMutual Select Small Cap Growth Equity R5 debuted in May of 1999. Since then, MSGSX has accumulated assets of about $134.14 million, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. MSGSX has a 5-year annualized total return of 24.05% 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 23.8%, 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 MSGSX over the past three years is 24.56% compared to the category average of 16.4%. Looking at the past 5 years, the fund's standard deviation is 19.79% compared to the category average of 13.7%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.19, the fund is likely to be more 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. MSGSX's 5-year performance has produced a positive alpha of 4.01, 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 largely on equities that are traded in the United States.

Right now, 92.2% of this mutual fund's holdings are stocks, with an average market capitalization of $5.63 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Health
  3. Industrial Cyclical
With turnover at about 79%, this fund makes fewer trades than the average comparable fund.

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, MSGSX is a no load fund. It has an expense ratio of 0.97% compared to the category average of 1.21%. So, MSGSX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, MassMutual Select Small Cap Growth Equity R5 ( MSGSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, MassMutual Select Small Cap Growth Equity R5 ( MSGSX ) looks like a good potential choice for investors right now.

This could just be the start of your research on MSGSXin the Small Cap Growth 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. 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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