Is Index Funds S&P 500 Equal Weight a Strong Mutual Fund Pick Right Now?

Any investors hoping to find an Index fund could think about starting with Index Funds S&P 500 Equal Weight INDEX. INDEX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

Index Funds is based in Denver, CO, and is the manager of INDEX. Since Index Funds S&P 500 Equal Weight made its debut in April of 2015, INDEX has garnered more than $109.74 million in assets. Michael Willis is the fund's current manager and has held that role since April of 2015.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 10.26%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.61%, 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. The standard deviation of INDEX over the past three years is 17.85% compared to the category average of 17.28%. The fund's standard deviation over the past 5 years is 20.33% compared to the category average of 18.47%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.05, 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 -2.89. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, INDEX is a no load fund. It has an expense ratio of 0.25% compared to the category average of 0.76%. From a cost perspective, INDEX is actually cheaper than its peers.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $1,000.

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

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and lower fees, Index Funds S&P 500 Equal Weight ( INDEX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

Don't stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio.

To read this article on Zacks.com click here.