Large Cap Blend fund seekers may want to consider taking a look at CGM Focus Fund (CGMFX). CGMFX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
CGMFX 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
CGM is responsible for CGMFX, and the company is based out of Boston, MA. CGM Focus Fund made its debut in September of 1997, and since then, CGMFX has accumulated about $768.20 million in assets, per the most up-to-date date available. The fund's current manager, Ken Heebner, has been in charge of the fund since September of 1997.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. CGMFX has a 5-year annualized total return of 4.93% and is in the bottom 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 5.28%, 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 CGMFX over the past three years is 18.56% compared to the category average of 10.05%. Looking at the past 5 years, the fund's standard deviation is 17.96% compared to the category average of 10.52%. 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, CGMFX lost 58.01% and underperformed comparable funds by 8.41%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 1.29, the fund is likely to be more volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. CGMFX's 5-year performance has produced a negative alpha of -7.67, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, CGMFX is a no load fund. It has an expense ratio of 1.16% compared to the category average of 0.98%. So, CGMFX is actually more expensive than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, CGM Focus Fund ( CGMFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, CGM Focus Fund ( CGMFX ) looks like a somewhat average choice for investors right now.
This could just be the start of your research on CGMFXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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