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Is PRIMECAP Odyssey Growth Fund (POGRX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

On the lookout for a Large Cap Growth fund? Starting with PRIMECAP Odyssey Growth Fund (POGRX) is one possibility. POGRX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

POGRX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Primecap Odyssey is based in Pasadena, CA, and is the manager of POGRX. PRIMECAP Odyssey Growth Fund debuted in November of 2004. Since then, POGRX has accumulated assets of about $12.36 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 11.87%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.9%, 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. Over the past three years, POGRX's standard deviation comes in at 17.18%, compared to the category average of 13.54%. Looking at the past 5 years, the fund's standard deviation is 16.08% compared to the category average of 13.3%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. POGRX lost 47.43% in the most recent bear market and outperformed its peer group by 1%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. POGRX has a 5-year beta of 1.2, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -0.38, which shows 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 principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 75.7% of its assets in stocks, which have an average market capitalization of $80.15 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Health
  3. Industrial Cyclical
  4. Other

This fund's turnover is about 4%, so the fund managers are making fewer trades than comparable funds.

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, POGRX is a no load fund. It has an expense ratio of 0.64% compared to the category average of 1.05%. So, POGRX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $2,000; each subsequent investment needs to be at least $100.

Bottom Line

Overall, PRIMECAP Odyssey Growth Fund ( POGRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, PRIMECAP Odyssey Growth Fund ( POGRX ) looks like a good potential choice for investors right now.

This could just be the start of your research on POGRXin the Large Cap Growth 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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