Back to top

Image: Bigstock

Is Goldman Sachs Large Cap Value Insights A (GCVAX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

On the lookout for a Large Cap Value fund? Starting with Goldman Sachs Large Cap Value Insights A (GCVAX - Free Report) is one possibility. GCVAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

GCVAX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds'high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.

History of Fund/Manager

Goldman Sachs is based in New York, NY, and is the manager of GCVAX. The Goldman Sachs Large Cap Value Insights A made its debut in December of 1998 and GCVAX has managed to accumulate roughly $63.85 million in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 11.95%, 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 9.61%, 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. GCVAX's standard deviation over the past three years is 11.39% compared to the category average of 9.05%. The standard deviation of the fund over the past 5 years is 10.72% compared to the category average of 8.91%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, GCVAX lost 55.54% and underperformed comparable funds by 5.31%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Nevertheless, with a 5-year beta of 1.04, the fund is likely to be more volatile than the market average. 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. GCVAX has generated a negative alpha over the past five years of -1.26, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 primarily on equities that are traded in the United States.

The mutual fund currently has 91.7% of its holdings in stocks, and these companies have an average market capitalization of $81.70 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Industrial Cyclical
  3. Energy

Turnover is 208%, which means, on average, the fund makes more trades per year than the comparable average.

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, GCVAX is a load fund. It has an expense ratio of 0.96% compared to the category average of 1.03%. From a cost perspective, GCVAX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50.

Bottom Line

Overall, Goldman Sachs Large Cap Value Insights A has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Goldman Sachs Large Cap Value Insights A looks like a good potential choice for investors right now.

Your research on the Large Cap Value segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


GOLDMAN SACHS LCAP VAL INSIGH (GCVAX) - free report >>