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Is AQR Large Cap Defensive Style I (AUEIX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Mutual Fund Equity Report fund could think about starting with AQR Large Cap Defensive Style I (AUEIX - Free Report) . AUEIX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

AQR Funds is based in Denver, CO, and is the manager of AUEIX. AQR Large Cap Defensive Style I made its debut in July of 2012, and since then, AUEIX has accumulated about $2.73 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 9.4%, and it sits in the middle 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 14.6%, 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. Over the past three years, AUEIX's standard deviation comes in at 16.83%, compared to the category average of 18.4%. Over the past 5 years, the standard deviation of the fund is 16.32% compared to the category average of 16.35%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.85, the fund is likely to be less 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. AUEIX has generated a negative alpha over the past five years of -0.36, demonstrating 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.

As of the last filing date, the mutual fund has 85.2% of its assets in stocks, which have an average market capitalization of $137.65 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Non-Durable
  • Finance
  • Industrial Cyclical
With turnover at about 28%, this fund is making fewer trades than comparable funds.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, AUEIX is a no load fund. It has an expense ratio of 0.37% compared to the category average of 0.91%. So, AUEIX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $5 million; each subsequent investment has no minimum amount.

Bottom Line

Overall, AQR Large Cap Defensive Style I ( AUEIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, AQR Large Cap Defensive Style I ( AUEIX ) looks like a great potential choice for investors right now.

Don't stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare AUEIX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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