Is Loomis Sayles Growth Fund A (LGRRX) a Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that may not be worth investigating is Loomis Sayles Growth Fund A (LGRRX). LGRRX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

LGRRX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

Natixis Funds is based in Kansas City, MO, and is the manager of LGRRX. The Loomis Sayles Growth Fund A made its debut in May of 1991 and LGRRX has managed to accumulate roughly $1.16 billion in assets, as of the most recently available information. The fund is currently managed by Aziz Hamzaogullari who has been in charge of the fund since May of 2010.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 11.07%, and it sits in the middle 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 18.3%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. LGRRX's standard deviation over the past three years is 17.23% compared to the category average of 12.53%. The fund's standard deviation over the past 5 years is 20.26% compared to the category average of 14.61%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.21, 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. The fund has produced a negative alpha over the past 5 years of -2.59, which shows 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, LGRRX is a load fund. It has an expense ratio of 0.90% compared to the category average of 0.94%. So, LGRRX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $2,500, while there is no minimum for each subsequent investment.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, Loomis Sayles Growth Fund A ( LGRRX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, Loomis Sayles Growth Fund A ( LGRRX ) looks like a somewhat weak 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. 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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This article originally published on Zacks Investment Research (zacks.com).

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