Is MFS Value R6 (MEIKX) a Strong Mutual Fund Pick Right Now?
If you’re looking for a Large Cap Value fund category, then a potential option is MFS Value R6 (MEIKX). MEIKX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
MEIKX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream find these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds’ high growth opportunities are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
History of Fund/Manager
MFS is based in Boston, MA, and is the manager of MEIKX. MFS Value R6 made its debut in June of 2012, and since then, MEIKX has accumulated about $16.84 billion in assets, per the most up-to-date date available. 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 7.86%, and is in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 14.27%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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, MEIKX’s standard deviation comes in at 11.27%, compared to the category average of 11.05%. The standard deviation of the fund over the past 5 years is 13.66% compared to the category average of 12.89%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. MEIKX has a 5-year beta of 0.73, which means it is likely to be less 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. MEIKX’s 5-year performance has produced a negative alpha of -3.22, 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, MEIKX is a no load fund. It has an expense ratio of 0.44% compared to the category average of 0.93%. From a cost perspective, MEIKX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, average downside risk, and lower fees, MFS Value R6 ( MEIKX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.
This could just be the start of your research on MEIKX in the Large Cap Value 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. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (MEIKX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).