- 29 ноября 2018, 15:00
- Zacks Investment Research
If investors are looking at the Large Cap Blend fund category, make sure to pass over Invesco Diversified Dividend A (LCEAX). LCEAX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
We note that LCEAX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.
History of Fund/Manager
Invesco is based in Kansas City, MO, and is the manager of LCEAX. Invesco Diversified Dividend A made its debut in December of 2001, and since then, LCEAX has accumulated about $5.27 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.
Of course, investors look for strong performance in funds. LCEAX has a 5-year annualized total return of 7.4% 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 5.79%, 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. Compared to the category average of 8.97%, the standard deviation of LCEAX over the past three years is 6.98%. The standard deviation of the fund over the past 5 years is 7.64% compared to the category average of 8.75%. This makes the fund less volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In LCEAX's case, the fund lost 44.52% in the most recent bear market and underperformed comparable funds by 5.16%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.67, so it is likely going to be less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a negative alpha over the past 5 years of -0.28, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, LCEAX is a load fund. It has an expense ratio of 0.80% compared to the category average of 1%. So, LCEAX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.
Overall, Invesco Diversified Dividend A ( LCEAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
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