If you've been stuck searching for Large Cap Growth funds, you might want to consider passing on by Baron Fifth Avenue Growth Retail (BFTHX) as a possibility. BFTHX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
BFTHX 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
Baron is based in New York, NY, and is the manager of BFTHX. Baron Fifth Avenue Growth Retail debuted in May of 2004. Since then, BFTHX has accumulated assets of about $127.30 million, according to the most recently available information. Alex Umansky is the fund's current manager and has held that role since November of 2011.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 12.67%, and is in the bottom 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 1.76%, 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. BFTHX's standard deviation over the past three years is 29.09% compared to the category average of 16.35%. The fund's standard deviation over the past 5 years is 26.48% compared to the category average of 17.09%. 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 1.18, so it is likely going to be 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. BFTHX has generated a negative alpha over the past five years of -3.35, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, BFTHX is a no load fund. It has an expense ratio of 1% compared to the category average of 0.94%. BFTHX is actually more expensive than its peers when you consider factors like cost.
While the minimum initial investment for the product is $2,000, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Baron Fifth Avenue Growth Retail ( BFTHX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on the Large Cap Growth area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into BFTHX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
