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Is MassMutual Select Small Cap Growth Equity I (MSGZX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for MSGZX

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This story originally appeared on Zacks

If you have been looking for Small Cap Growth funds, a place to start could be MassMutual Select Small Cap Growth Equity I (MSGZX). MSGZX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

- Zacks

Objective

MSGZX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.

History of Fund/Manager

MassMutual is based in Springfield, MA, and is the manager of MSGZX. MassMutual Select Small Cap Growth Equity I made its debut in November of 2010, and since then, MSGZX has accumulated about $461.15 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 19.98%, 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 17.19%, which places it in the middle 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 MSGZX over the past three years is 24.52% compared to the category average of 16.48%. Looking at the past 5 years, the fund's standard deviation is 20% compared to the category average of 13.6%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.16, so investors should note that it is hypothetically more 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. MSGZX has generated a positive alpha over the past five years of 1, demonstrating that managers in this portfolio are skilled in picking 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 largely on equities that are traded in the United States.

Currently, this mutual fund is holding 94.37% stock in stocks, which have an average market capitalization of $5.40 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Health
  3. Industrial Cyclical

Turnover is 80%, which means, on average, the fund makes fewer trades than comparable funds.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, MSGZX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 1.21%. MSGZX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while 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, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Small Cap Growth 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 MSGZX too 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.



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