Is Scout Mid Cap Fund (UMBMX) a Strong Mutual Fund Pick Right Now?

·4 min read

If you have been looking for Mid Cap Growth funds, it would not be wise to start your search with Scout Mid Cap Fund (UMBMX). UMBMX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes UMBMX as Mid Cap Growth, a segment packed with options. Mid Cap Growth mutual funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers. A firm is typically considered to be a growth stock if it consistently posts impressive sales and/or earnings growth.

History of Fund/Manager

UMBMX is a part of the Eagle Funds family of funds, a company based out of St. Petersburg, FL. Scout Mid Cap Fund made its debut in November of 2006, and since then, UMBMX has accumulated about $4.27 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 15.39%, 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 12.21%, 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. UMBMX's standard deviation over the past three years is 22.03% compared to the category average of 16.27%. The standard deviation of the fund over the past 5 years is 17.82% compared to the category average of 13.38%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.09, the fund is likely to be more volatile than 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. Over the past 5 years, the fund has a negative alpha of -2.29. This means that 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 mostly on equities that are traded in the United States.

Right now, 89.72% of this mutual fund's holdings are stocks, with an average market capitalization of $22.67 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Industrial Cyclical

  3. Finance

  4. Retail Trade

Turnover is about 112%, so those in charge of the fund make more trades in a given year than the average of comparable funds.

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, UMBMX is a no load fund. It has an expense ratio of 0.95% compared to the category average of 1.17%. From a cost perspective, UMBMX is actually cheaper than its peers.

While the minimum initial investment for the product is $10,000, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, Scout Mid Cap Fund ( UMBMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Scout Mid Cap Fund ( UMBMX ) looks like a somewhat weak choice for investors right now.

Want even more information about UMBMX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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