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Is Invesco American Franchise A (VAFAX) a Strong Mutual Fund Pick Right Now?
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On the lookout for a Large Cap Growth fund? Starting with Invesco American Franchise A (VAFAX - Free Report) should not be a possibility at this time. VAFAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VAFAX 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
Invesco is responsible for VAFAX, and the company is based out of Kansas City, MO. Invesco American Franchise A debuted in June of 2005. Since then, VAFAX has accumulated assets of about $10.05 billion, according to the most recently available information. Ido Cohen is the fund's current manager and has held that role since June of 2010.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 10.77%, and is 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 16.83%, 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. VAFAX's standard deviation over the past three years is 15.29% compared to the category average of 9.96%. Looking at the past 5 years, the fund's standard deviation is 14.96% compared to the category average of 10.07%. 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 the most recent bear market, VAFAX lost 42.16% and outperformed its peer group by 7%. This might suggest that the fund is a better choice than its peers during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VAFAX has a 5-year beta of 1.15, which means it 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. VAFAX's 5-year performance has produced a negative alpha of -1.04, which means 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 principally on equities that are traded in the United States.
This fund is currently holding about 89.58% stock in stocks, with an average market capitalization of $276.03 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Retail Trade
With turnover at about 48%, this fund makes fewer trades than comparable funds.
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, VAFAX is a load fund. It has an expense ratio of 0.99% compared to the category average of 1.05%. VAFAX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, Invesco American Franchise A ( VAFAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak 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. 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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Is Invesco American Franchise A (VAFAX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Large Cap Growth fund? Starting with Invesco American Franchise A (VAFAX - Free Report) should not be a possibility at this time. VAFAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VAFAX 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
Invesco is responsible for VAFAX, and the company is based out of Kansas City, MO. Invesco American Franchise A debuted in June of 2005. Since then, VAFAX has accumulated assets of about $10.05 billion, according to the most recently available information. Ido Cohen is the fund's current manager and has held that role since June of 2010.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 10.77%, and is 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 16.83%, 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. VAFAX's standard deviation over the past three years is 15.29% compared to the category average of 9.96%. Looking at the past 5 years, the fund's standard deviation is 14.96% compared to the category average of 10.07%. 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 the most recent bear market, VAFAX lost 42.16% and outperformed its peer group by 7%. This might suggest that the fund is a better choice than its peers during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VAFAX has a 5-year beta of 1.15, which means it 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. VAFAX's 5-year performance has produced a negative alpha of -1.04, which means 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 principally on equities that are traded in the United States.
This fund is currently holding about 89.58% stock in stocks, with an average market capitalization of $276.03 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Retail Trade
With turnover at about 48%, this fund makes fewer trades than comparable funds.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, VAFAX is a load fund. It has an expense ratio of 0.99% compared to the category average of 1.05%. VAFAX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.
Bottom Line
Overall, Invesco American Franchise A ( VAFAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak 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. 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.