Is Transamerica Capital Growth A (IALAX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Large Cap Growth funds, a place to start could be Transamerica Capital Growth A (IALAX). IALAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

IALAX 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

IALAX finds itself in the Transamerica family, based out of Clearwater, FL. Transamerica Capital Growth A made its debut in March of 1999, and since then, IALAX has accumulated about $866.60 million in assets, per the most up-to-date date available. The fund’s current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 29.44%, and it sits 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 36.62%, 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. Over the past three years, IALAX’s standard deviation comes in at 24.17%, compared to the category average of 15.69%. Over the past 5 years, the standard deviation of the fund is 21.02% compared to the category average of 13.66%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.05, the fund is likely to be more volatile than the market average. 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 positive alpha over the past 5 years of 13.91, which shows that managers in this portfolio are skilled in picking 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, IALAX is a load fund. It has an expense ratio of 1.12% compared to the category average of 1.05%. Looking at the fund from a cost perspective, IALAX is actually more expensive than its peers.

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.

Bottom Line

Overall, Transamerica Capital Growth A ( IALAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Transamerica Capital Growth A ( IALAX ) looks like a good potential 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 IALAX too 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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