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Is Prudential Jennison Focused Growth A (SPFAX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
Mutual Fund Report for TRMCX

Have you been searching for a Large Cap Growth fund? You might want to begin with Prudential Jennison Focused Growth A (SPFAX). SPFAX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

SPFAX 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

Prudential is based in Providence, RI, and is the manager of SPFAX. Prudential Jennison Focused Growth A made its debut in June of 2000, and since then, SPFAX has accumulated about $253.68 million in assets, per the most up-to-date date available. 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 15.33%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 15.43%, 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 SPFAX over the past three years is 15.45% compared to the category average of 9.33%. The fund's standard deviation over the past 5 years is 14.5% compared to the category average of 9.06%. 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. SPFAX lost 40.9% in the most recent bear market and underperformed its peer group by 8.07%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 1.13, 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. With a negative alpha of -0.46, 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 primarily on equities that are traded in the United States.

As of the last filing date, the mutual fund has 92.17% of its assets in stocks, which have an average market capitalization of $230.69 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Non-Durable

With turnover at about 87%, this fund makes fewer trades than comparable funds.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SPFAX is a load fund. It has an expense ratio of 1.24% compared to the category average of 1.10%. From a cost perspective, SPFAX is actually more expensive than its peers.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.

Bottom Line

Overall, Prudential Jennison Focused Growth A ( SPFAX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Prudential Jennison Focused Growth A ( SPFAX ) looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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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