Any investors who are searching for Index funds should take a look at USAA NASDAQ-100 Index Fund (USNQX). USNQX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.
History of Fund/Manager
USNQX is a part of the USAA Group family of funds, a company based out of San Antonio, TX. USAA NASDAQ-100 Index Fund made its debut in October of 2000, and since then, USNQX has accumulated about $1.88 billion in assets, per the most up-to-date date available. The fund is currently managed by Brent Reeder who has been in charge of the fund since December of 2006.
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 15.52%, and is 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 14.93%, 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. Compared to the category average of 7.51%, the standard deviation of USNQX over the past three years is 13.16%. Looking at the past 5 years, the fund's standard deviation is 13.29% compared to the category average of 8.68%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, USNQX lost 50.22% and underperformed comparable funds by 4.08%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.17, which means it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a positive alpha of 2.55. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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.
The mutual fund currently has 95.8% of its holdings in stocks, which have an average market capitalization of $302.34 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is about 2%, so those in charge of the fund make fewer trades than the average comparable fund.
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, USNQX is a no load fund. It has an expense ratio of 0.48% compared to the category average of 0.74%. Looking at the fund from a cost perspective, USNQX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $50.
Don't stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare USNQX to its peers as well 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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