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Is BlackRock Exchange BlackRock (STSEX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for STSEX

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This story originally appeared on Zacks

If you've been stuck searching for Mutual Fund Equity Report funds, you might want to consider passing on by BlackRock Exchange BlackRock (STSEX) as a possibility. STSEX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

- Zacks

History of Fund/Manager

BlackRock is responsible for STSEX, and the company is based out of New York, NY. Since BlackRock Exchange BlackRock made its debut in May of 1986, STSEX has garnered more than $220.02 million in assets. The fund is currently managed by Lawrence Kemp who has been in charge of the fund since January of 2013.

Performance

Investors naturally seek funds with strong performance. STSEX has a 5-year annualized total return of 15.57% 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 22.61%, 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. Compared to the category average of 18.88%, the standard deviation of STSEX over the past three years is 15.83%. The standard deviation of the fund over the past 5 years is 14.27% compared to the category average of 15.72%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.88, which means it is hypothetically less volatile than the market at large. 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. STSEX has generated a negative alpha over the past five years of -0.61, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 mostly on equities that are traded in the United States.

Right now, 80.84% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $950.55 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Health

Turnover is 0%, which means, on average, the fund makes fewer trades than the average comparable fund.

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, STSEX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 1.01%. Looking at the fund from a cost perspective, STSEX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.

Bottom Line

Overall, BlackRock Exchange BlackRock ( STSEX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

For additional information on the Mutual Fund Equity Report 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 STSEX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.



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