There are plenty of choices in the Allocation Balanced category, but where should you start your research? Well, one fund that may not be worth investigating is BlackRock Global Allocation A (MDLOX). MDLOX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Zacks' Allocation Balanced funds is an area filled with options, such as MDLOX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.
History of Fund/Manager
MDLOX finds itself in the BlackRock family, based out of New York, NY. BlackRock Global Allocation A debuted in October of 1994. Since then, MDLOX has accumulated assets of about $8.23 billion, according to the most recently available information. The fund is currently managed by Russ Koesterich who has been in charge of the fund since January of 2017.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.73%, and is in the top 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 0.92%, 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. Compared to the category average of 13.9%, the standard deviation of MDLOX over the past three years is 11.96%. The fund's standard deviation over the past 5 years is 12.74% compared to the category average of 14.85%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.66, so it is likely going to be less volatile than the market at large. 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 -4.47, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, MDLOX is a load fund. It has an expense ratio of 1.08% compared to the category average of 0.94%. MDLOX is actually more expensive than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $50
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively strong performance, average downside risk, and higher fees, BlackRock Global Allocation A ( MDLOX ) has a low Zacks Mutual Fund rank, and therefore looks a poor potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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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.
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