Yahoo Finance Is Meridian Contrarian Legacy (MVALX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Small Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is Meridian Contrarian Legacy (MVALX). MVALX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes MVALX as Small Cap Value, which is a segment packed with options. Known for investing in companies with market caps under $2 billion, Small Cap Value mutual funds represent good value because of many things; stocks in these funds offer low P/E ratios, high dividend yields, and better-than-average P/S ratios.
History of Fund/Manager
Meridian is based in Providence, RI, and is the manager of MVALX. The Meridian Contrarian Legacy made its debut in February of 1994 and MVALX has managed to accumulate roughly $592.90 million in assets, as of the most recently available information. The fund is currently managed by James England who has been in charge of the fund since December of 2001.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 8.81%, and it sits 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 12.37%, 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, MVALX's standard deviation comes in at 15.05%, compared to the category average of 12.25%. The standard deviation of the fund over the past 5 years is 14.42% compared to the category average of 11.84%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In MVALX's case, the fund lost 44.06% in the most recent bear market and outperformed its peer group by 7%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. MVALX has a 5-year beta of 1.09, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -2.35, which shows 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 principally on equities that are traded in the United States.
Right now, 91.89% of this mutual fund's holdings are stocks, with an average market capitalization of $35.89 billion. The fund has the heaviest exposure to the following market sectors:
Industrial Cyclical
Finance
Technology
Other
With turnover at about 57%, this fund is making fewer trades than 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, MVALX is a no load fund. It has an expense ratio of 1.12% compared to the category average of 1.29%. So, MVALX is actually cheaper than its peers from a cost perspective.
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, Meridian Contrarian Legacy ( MVALX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on MVALXin the Small Cap Value 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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