Is Hodges Small Cap Fund Institutional Class (HDSIX) a Strong Mutual Fund Pick Right Now?

On the lookout for a Small Cap Blend fund? Starting with Hodges Small Cap Fund Institutional Class (HDSIX) should not be a possibility at this time. HDSIX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.ObjectiveHDSIX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.History of Fund/ManagerHodges Capital is based in Dallas, TX, and is the manager of HDSIX. Hodges Small Cap Fund Institutional Class made its debut in December of 2008, and since then, HDSIX has accumulated about $46.89 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.PerformanceOf course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 17%, 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 11.85%, which places it in the top 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. Over the past three years, HDSIX's standard deviation comes in at 26.88%, compared to the category average of 17.92%. The fund's standard deviation over the past 5 years is 29.74% compared to the category average of 19.46%. This makes the fund more volatile than its peers over the past half-decade.Risk FactorsThe fund has a 5-year beta of 1.41, so investors should note that 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. HDSIX has generated a negative alpha over the past five years of -1.72, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.HoldingsInvestigating 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 largely on equities that are traded in the United States.The mutual fund currently has 90.01% of its holdings in stocks, with an average market capitalization of $5.72 billion. The fund has the heaviest exposure to the following market sectors: Industrial Cyclical Energy Technology Retail Trade Turnover is about 62%, so those in charge of the fund make more trades in a given year than the category average.ExpensesCosts 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, HDSIX is a no load fund. It has an expense ratio of 1.11% compared to the category average of 0.98%. From a cost perspective, HDSIX is actually more expensive than its peers.Investors should also note that the minimum initial investment for the product is $1 million and that each subsequent investment needs to be at $100Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.Bottom LineOverall, Hodges Small Cap Fund Institutional Class ( HDSIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Hodges Small Cap Fund Institutional Class ( HDSIX ) looks like a poor potential choice for investors right now.Don't stop here for your research on Small Cap Blend 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 HDSIX to its peers as well 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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (HDSIX): Fund Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks