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Is Hartford Small Company HLS IB (HDMBX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Small Cap Growth fund category, Hartford Small Company HLS IB (HDMBX - Free Report) could be a potential option. HDMBX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Small Cap Growth funds is an area filled with options, such as HDMBX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.

History of Fund/Manager

Hartford is based in Woodbury, MN, and is the manager of HDMBX. Hartford Small Company HLS IB debuted in October of 2002. Since then, HDMBX has accumulated assets of about $40.83 million, according to the most recently available information. The fund is currently managed by Ranjit Ramachandran who has been in charge of the fund since February of 2020.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 8.55%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -5.11%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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, HDMBX's standard deviation comes in at 21.76%, compared to the category average of 18.06%. The standard deviation of the fund over the past 5 years is 24% compared to the category average of 19.49%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.13, so investors should note that it is hypothetically more volatile than the market at large. 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 -6.24. 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 largely on equities that are traded in the United States.

Currently, this mutual fund is holding 75.81% in stocks, with an average market capitalization of $5.16 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Health
  • Industrial Cyclical
  • Non-Durable
Turnover is 39%, which means, on average, the fund makes fewer trades than comparable funds.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, HDMBX is a no load fund. It has an expense ratio of 1.05% compared to the category average of 1.07%. HDMBX is actually cheaper than its peers when you consider factors like cost.

Investors should also note, that according to our data, the fund does not have any minimum investment requirements.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Hartford Small Company HLS IB ( HDMBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Hartford Small Company HLS IB ( HDMBX ) looks like a great potential choice for investors right now.

Your research on the Small Cap Growth segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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