Is the State Farm Growth Fund (STFGX) a good mutual fund choice right now?

IIf investors are looking to the Mutual Fund Equity Report class of funds, the State Farm Growth Fund (STFGX) could be a potential option. STFGX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine predictor factors such as size, cost, and past performance.

Fund/manager history

State Farm is based in Bloomington, Illinois, and is the manager of STFGX. The State Farm Growth Fund got its start in March 1975, and since then STFGX has accumulated approximately $6.99 billion in assets, according to the most recent date available. The current fund manager is a team of investment professionals.

Performance

Investors are naturally looking for high performance funds. This fund has a 5-year annualized total return of 12.01% and is in the middle third of its peers in the category. If you’re interested in shorter timeframes, don’t overlook the fund’s 3-year annualized total return of 16.24%, which puts it in the top third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 18.92%, STFGX’s standard deviation over the past three years is 16.58%. The standard deviation of the fund over the last 5 years is 14.82% against a category average of 16.72%. This makes the fund less volatile than its peers over the past half-decade.

Risk factors

Investors should keep in mind beta, an important way to measure a mutual fund‘s risk relative to the market as a whole. STFGX has a 5-year beta of 0.88, which means it is likely to be less volatile than the market average. Alpha is an additional metric to consider, as it represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which in this case is the S&P 500. STFGX generated alpha positive over the past five years by 0.15 , demonstrating that the managers of this portfolio know how to choose securities that generate higher returns than those of the benchmark index.

Assets

Examining the stock 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 whether there are any inherent biases in their approach. For this particular fund, the focus is primarily on stocks that are traded in the United States.

This fund currently holds approximately 77.35% equity, with an average market capitalization of $362.22 billion. The fund has the highest exposure to the following market sectors:

  1. Technology
  2. Industrial Cyclic
  3. Not durable
  4. Health

Expenses

Costs are increasingly important for investing in mutual funds, especially as competition intensifies in this market. And all other things being equal, a lower-cost product will outperform its otherwise identical counterpart, so it’s essential for investors to take a closer look at these metrics. In terms of fees, STFGX is a no-load fund. It has an expense ratio of 0.12% compared to the category average of 0.92%. Thus, STFGX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $250 and each subsequent investment must be $50.

Conclusion

Overall, the State Farm Growth Fund (STFGX) has a high ranking of Zacks Mutual Fund, and in conjunction with its relatively similar performance, medium downside risk and lower fees, the State Farm Growth Fund (STFGX) seems like a great potential choice for investors. now.

This might just be the start of your search for STFGX in the Mutual Fund Stock Report category. Consider going to www.zacks.com/funds/mutual-funds for more information on this fund, and all the others we rank for additional information as well. Want to know more ? We have a full suite of stock tools that you can also use to find the best picks for your portfolio, no matter what type of investor you are.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Dolores W. Simon