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Is Invesco Equally-Weighted S&P 500 A (VADAX) a Strong Mutual Fund Pick Right Now?

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·4 min read
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Any investors hoping to find a Large Cap Blend fund could think about starting with Invesco Equally-Weighted S&P 500 A (VADAX). VADAX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VADAX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.

History of Fund/Manager

VADAX finds itself in the Invesco family, based out of Kansas City, MO. The Invesco Equally-Weighted S&P 500 A made its debut in July of 1997 and VADAX has managed to accumulate roughly $2.68 billion in assets, as of the most recently available information. 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 13.5%, and it sits in the bottom 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 13.25%, 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. VADAX's standard deviation over the past three years is 21.44% compared to the category average of 15.72%. The fund's standard deviation over the past 5 years is 17.17% compared to the category average of 13.16%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.11, 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. VADAX's 5-year performance has produced a negative alpha of -3.67, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

As of the last filing date, the mutual fund has 97.05% of its assets in stocks, which have an average market capitalization of $54.81 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance

  2. Technology

  3. Industrial Cyclical

Turnover is about 26%, so those in charge of the fund make fewer trades than its comparable peers.

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, VADAX is a load fund. It has an expense ratio of 0.53% compared to the category average of 0.96%. From a cost perspective, VADAX is actually cheaper than its peers.

This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $50.

Bottom Line

Overall, Invesco Equally-Weighted S&P 500 A ( VADAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Invesco Equally-Weighted S&P 500 A ( VADAX ) looks like a great potential choice for investors right now.

Want even more information about VADAX? 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. 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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