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Is PRIMECAP Odyssey Stock Fund (POSKX) a Strong Mutual Fund Pick Right Now?

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Large Cap Growth fund seekers should not consider taking a look at PRIMECAP Odyssey Stock Fund (POSKX - Free Report) at this time. POSKX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

POSKX 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

Primecap Odyssey is based in Pasadena, CA, and is the manager of POSKX. The PRIMECAP Odyssey Stock Fund made its debut in November of 2004 and POSKX has managed to accumulate roughly $9.56 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

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 9.41%, 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 11.24%, 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. Over the past three years, POSKX's standard deviation comes in at 14.39%, compared to the category average of 12.09%. Over the past 5 years, the standard deviation of the fund is 13.67% compared to the category average of 12.11%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, POSKX lost 45.4% and outperformed its peer group by 4%. This could mean that the fund is a better choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 1.1, so investors should note that it is hypothetically 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 -1.34, 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.

As of the last filing date, the mutual fund has 80.78% of its assets in stocks, with an average market capitalization of $114.06 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Industrial Cyclical
  3. Finance
  4. Health
Turnover is 4%, which means, on average, the fund makes fewer trades than comparable funds.

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, POSKX is a no load fund. It has an expense ratio of 0.65% compared to the category average of 0.96%. Looking at the fund from a cost perspective, POSKX is actually cheaper than its peers.

While the minimum initial investment for the product is $2,000, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, PRIMECAP Odyssey Stock Fund ( POSKX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong 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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