Is Hennessy Japan Small Cap Fund Investor (HJPSX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Pacific Rim - Equity fund category, make sure to pass over Hennessy Japan Small Cap Fund Investor (HJPSX). HJPSX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
HJPSX is classified in the Pacific Rim - Equity segment by Zacks, which is an area full of possibilities. Pacific Rim - Equity mutual funds see big investment opportunities in the dominant export-focused markets of Hong Kong, Singapore, Taiwan, and Korea. These funds also invest less than 10% of their assets in Japanese firms, as Japan mutual funds are very popular.
History of Fund/Manager
HJPSX finds itself in the Hennessy family, based out of Novato, CA. Since Hennessy Japan Small Cap Fund Investor made its debut in August of 2007, HJPSX has garnered more than $64.92 million in assets. The fund's current manager, Tadahiro Fujimura, has been in charge of the fund since August of 2007.
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 10.77%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 11.89%, which places it in the top 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. HJPSX's standard deviation over the past three years is 12.07% compared to the category average of 11.9%. Looking at the past 5 years, the fund's standard deviation is 11.59% compared to the category average of 12.21%. 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 HJPSX's case, the fund lost 42.04% in the most recent bear market and outperformed its peer group by 16%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 0.61, so investors should note that 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. HJPSX's 5-year performance has produced a positive alpha of 3.85, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, HJPSX is a no load fund. It has an expense ratio of 1.51% compared to the category average of 1.48%. Looking at the fund from a cost perspective, HJPSX is actually more expensive than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Hennessy Japan Small Cap Fund Investor ( HJPSX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, this fund looks like a poor potential choice for investors right now.
Your research on the Pacific Rim - Equity segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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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