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Is BlackRock Exchange BlackRock (STSEX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is BlackRock Exchange BlackRock (STSEX - Free Report) . STSEX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

STSEX 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

BlackRock is based in New York, NY, and is the manager of STSEX. BlackRock Exchange BlackRock made its debut in May of 1986, and since then, STSEX has accumulated about $153.42 million in assets, per the most up-to-date date available. Lawrence G. Kemp is the fund's current manager and has held that role since January of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 6.44%, and it sits 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 8.38%, 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 STSEX over the past three years is 10.37% compared to the category average of 11.77%. Over the past 5 years, the standard deviation of the fund is 10.7% compared to the category average of 11.85%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, STSEX lost 45.55% and outperformed its peer group by 3.22%. This might suggest that the fund is a better choice than its peers during a bear market.

Even still, the fund has a 5-year beta of 0.92, so investors should note that it is hypothetically 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. Over the past 5 years, the fund has a negative alpha of -1.26. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

As of the last filing date, the mutual fund has 93.54% of its assets in stocks, which have an average market capitalization of $361.97 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology
  3. Health
  4. Industrial Cyclical
Turnover is 0%, which means this 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, STSEX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 1.10%. From a cost perspective, STSEX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, BlackRock Exchange BlackRock ( STSEX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, BlackRock Exchange BlackRock ( STSEX ) looks like a great potential choice for investors right now.

For additional information on the Large Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into STSEX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.




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