Is Columbia Disciplined Core A (AQEAX) a Strong Mutual Fund Pick Right Now?
Any investors hoping to find a Large Cap Blend fund might consider looking past Columbia Disciplined Core A (AQEAX). AQEAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
AQEAX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a " buy and hold " mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.
History of Fund/Manager
Columbia is based in Kansas City, MO, and is the manager of AQEAX. Columbia Disciplined Core A debuted in December of 2004. Since then, AQEAX has accumulated assets of about $3.86 billion, according to the most recently available information. Peter Albanese is the fund's current manager and has held that role since August of 2014.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. AQEAX has a 5-year annualized total return of 14.8% and is in the middle 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 11.23%, which places it in the bottom 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. The standard deviation of AQEAX over the past three years is 18.73% compared to the category average of 15.49%. Looking at the past 5 years, the fund's standard deviation is 15.27% compared to the category average of 12.98%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 1, the fund is likely to be as volatile as the market average. 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. AQEAX's 5-year performance has produced a negative alpha of -1.76, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
Right now, 95.93% of this mutual fund's holdings are stocks, with an average market capitalization of $254.56 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Finance
Health
Retail Trade
With turnover at about 65%, this fund makes fewer trades than the average comparable fund.
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, AQEAX is a load fund. It has an expense ratio of 0.98% compared to the category average of 0.96%. So, AQEAX is actually more expensive than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $2,000 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Columbia Disciplined Core A ( AQEAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, Columbia Disciplined Core A ( AQEAX ) looks like a somewhat weak choice for investors right now.
This could just be the start of your research on AQEAXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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