Is MassMutual Sel Small Cap Grth Eq I (MSGZX) A Strong Mutual Fund Pick Right Now?

Small Cap Growth fund seekers should consider taking a look at MassMutual Select Small Cap Growth Equity I MSGZX. MSGZX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

MSGZX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.

History of Fund/Manager

MassMutual is responsible for MSGZX, and the company is based out of Springfield, MA. MassMutual Select Small Cap Growth Equity I debuted in November of 2010. Since then, MSGZX has accumulated assets of about $287.96 million, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. MSGZX has a 5-year annualized total return of 15.08% and it sits in the middle 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 8.52%, 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. Over the past three years, MSGZX's standard deviation comes in at 13.38%, compared to the category average of 9.54%. The standard deviation of the fund over the past 5 years is 13.35% compared to the category average of 13.81%. 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.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. MSGZX has a 5-year beta of 1.13, which means it is likely to be more volatile than the market average. 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 -1.49, which shows that 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 primarily on equities that are traded in the United States.

This fund is currently holding about 98.00% stock in stocks, with an average market capitalization of $3.53 billion. The fund has the heaviest exposure to the following market sectors:

1. Finance
2. Technology
3. Industrial Cyclical

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, MSGZX is a no load fund. It has an expense ratio of 0.86% compared to the category average of 1.36%. From a cost perspective, MSGZX is actually cheaper than its peers.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, MassMutual Select Small Cap Growth Equity I MSGZX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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.