Back to top

Is AIG Focused Dividend Strategy A (FDSAX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Any investors hoping to find a Large Cap Blend fund might consider looking past AIG Focused Dividend Strategy A (FDSAX - Free Report) . FDSAX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

FDSAX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a " buy and hold " mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.

History of Fund/Manager

FDSAX finds itself in the AIG family, based out of Kansas City, MO. Since AIG Focused Dividend Strategy A made its debut in June of 1998, FDSAX has garnered more than $3.57 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 8.34%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.31%, 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. Over the past three years, FDSAX's standard deviation comes in at 11.35%, compared to the category average of 9.45%. The fund's standard deviation over the past 5 years is 11.31% compared to the category average of 9.83%. 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. FDSAX lost 53.01% in the most recent bear market and underperformed comparable funds by 3.64%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 0.89, 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 -1.82. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FDSAX is a load fund. It has an expense ratio of 1.04% compared to the category average of 0.96%. So, FDSAX is actually more expensive than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $500; each subsequent investment needs to be at least $100.

Bottom Line

Overall, AIG Focused Dividend Strategy A ( FDSAX ) has a low Zacks Mutual Fund rank, similar performance, average downside risk, and higher fees compared to its peers.

Don't stop here for your research on Large Cap Blend 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 FDSAX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


In-Depth Zacks Research for the Tickers Above


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


SUNAMERICA FOC DIV STRAT PTF (FDSAX) - free report >>

Published in