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Is Wells Fargo Premier Large Company Growth A (EKJAX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Large Cap Growth funds, a place to start could be Wells Fargo Premier Large Company Growth A (EKJAX - Free Report) . EKJAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

EKJAX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Wells Fargo is based in San Francisco, CA, and is the manager of EKJAX. Wells Fargo Premier Large Company Growth A made its debut in February of 1998, and since then, EKJAX has accumulated about $1.10 billion in assets, per the most up-to-date date available. 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. This fund in particular has delivered a 5-year annualized total return of 12%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 15.72%, which places it in the bottom 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 EKJAX over the past three years is 12.73% compared to the category average of 9.23%. Over the past 5 years, the standard deviation of the fund is 12.05% compared to the category average of 8.97%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In EKJAX's case, the fund lost 39.61% in the most recent bear market and underperformed its peer group by 9.36%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be 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. With a negative alpha of -2.3, managers in this portfolio find it difficult to pick 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 96.31% stock in stocks, which have an average market capitalization of $206.98 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Industrial Cyclical
Turnover is 43.87%, which means this fund makes fewer trades than its comparable peers.

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, EKJAX is a load fund. It has an expense ratio of 1.14% compared to the category average of 1.10%. Looking at the fund from a cost perspective, EKJAX is actually more expensive than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $100.

Bottom Line

Overall, Wells Fargo Premier Large Company Growth A ( EKJAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, Wells Fargo Premier Large Company Growth A ( EKJAX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.




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