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Is Index Funds S&P 500 Equal Weight (INDEX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for INDEX

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This story originally appeared on Zacks

If you're looking for a Mutual Fund Equity Report fund category, then a possible option is Index Funds S&P 500 Equal Weight (INDEX). INDEX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

- Zacks

History of Fund/Manager

INDEX is a part of the Index Funds family of funds, a company based out of Denver, CO. Since Index Funds S&P 500 Equal Weight made its debut in April of 2015, INDEX has garnered more than $70.20 million in assets. Michael G. Willis is the fund's current manager and has held that role since April of 2015.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 16.15%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 18.95%, 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. INDEX's standard deviation over the past three years is 21.33% compared to the category average of 19.35%. Looking at the past 5 years, the fund's standard deviation is 17.44% compared to the category average of 15.72%. 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. INDEX has a 5-year beta of 1.1, 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. Over the past 5 years, the fund has a negative alpha of -3.64. This means 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 largely on equities that are traded in the United States.

This fund is currently holding about 93.02% stock in stocks, which have an average market capitalization of $71.84 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Industrial Cyclical
  4. Non-Durable

This fund's turnover is about 96%, so the fund managers are making 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, INDEX is a no load fund. It has an expense ratio of 0.25% compared to the category average of 0.78%. INDEX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $1,000.

Bottom Line

Want even more information about INDEX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.



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