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Is PGIM Financial Services A (PFSAX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
·3 min read

Any investors hoping to find a Sector - Finance fund could think about starting with PGIM Financial Services A (PFSAX). PFSAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PFSAX is one of many Sector - Finance funds to choose from. Sector - Finance mutual funds provide investors with a diversified and stabilized investment approach focused on the financial space, which is a notoriously large, complex, and heavily-regulated industry. These funds include everything from insurance companies and exchanges to banks and investment giants; interest rates can impact the players of this space as well.

History of Fund/Manager

PGIM is based in Providence, RI, and is the manager of PFSAX. Since PGIM Financial Services A made its debut in June of 1999, PFSAX has garnered more than $63.51 million in assets. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. PFSAX has a 5-year annualized total return of 7.52% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.21%, 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. The standard deviation of PFSAX over the past three years is 24.89% compared to the category average of 17.62%. The standard deviation of the fund over the past 5 years is 21.56% compared to the category average of 15.06%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.26, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -7.83. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, PFSAX is a load fund. It has an expense ratio of 1.40% compared to the category average of 1.53%. So, PFSAX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $100.

Bottom Line

Overall, PGIM Financial Services A ( PFSAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on PFSAXin the Sector - Finance category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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