On the lookout for an Allocation Balanced fund? Starting with BlackRock (NYSE:BLK) Global Allocation A (MDLOX) should not be a possibility at this time. MDLOX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
MDLOX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
BlackRock is based in New York, NY, and is the manager of MDLOX. The BlackRock Global Allocation A made its debut in October of 1994 and MDLOX has managed to accumulate roughly $10.40 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 1.82%, and it sits 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 2.79%, 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. MDLOX's standard deviation over the past three years is 6.66% compared to the category average of 8.72%. The fund's standard deviation over the past 5 years is 6.67% compared to the category average of 8.69%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, MDLOX lost 29.24% and outperformed its peer group by 7.16%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.55, which means it is hypothetically less 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. MDLOX's 5-year performance has produced a negative alpha of -3.06, 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, MDLOX is a load fund. It has an expense ratio of 1.07% compared to the category average of 0.88%. From a cost perspective, MDLOX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, BlackRock Global Allocation A ( MDLOX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into MDLOX too 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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Zacks Investment Research