The MainStay Large Cap Growth Fund: How’s 2016 Looking?



The MainStay Large Cap Growth Fund: Overview

The MainStay Large Cap Growth Fund – Investor Class (MLINX) had $15.5 billion worth of assets under management at the end of January 2016. As of December 2015, its assets were spread across 65 holdings and included stocks of Delphi Automotive (DLPH), Charles Schwab & Co. (SCHW), Ecolab (ECL), Palo Alto Networks (PANW), and Boston Scientific (BSX), which comprise a combined 6.0% of the fund’s portfolio.

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The MainStay Large Cap Growth Fund’s performance

From a purely NAV (net asset value) return standpoint, the MLINX stood tenth among the 12 funds in this review in the year ended February 12, 2016. For 2015, it emerged as an average performer, with its returns placing it sixth among its peers.

Other metrics

The MLINX’s standard deviation, or the volatility of returns, in the one -year period ended February 12 was 19.3%. This was much higher than the S&P 500’s 16.4%, and higher than the peer group’s average of 18.6%. It also made it the second most volatile fund for the given period. This was not the case in 2015, where its volatility was only slightly above average.

The fund’s risk-adjusted returns, calculated by the Sharpe ratio, amounted to -0.58, much worse than the S&P 500’s -0.47 for the one-year period ended February 12. It also shared the position for the second-lowest ratio for the period. For 2015, the fund’s risk-adjusted returns stood in the middle of the group of 12 funds.

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The information ratio, calculated with the S&P 500 as the benchmark, was -0.52 for the one-year period ended February 12, which placed it in the bottom half of the peer group. The information ratio shows the fund manager’s consistency and ability to generate excess returns over a benchmark. For 2015, the fund’s information ratio against that of the S&P 500 placed it is an average performer among its peers.

A note to investors

The fund’s volatility is a cause for major concern. Furthermore, its returns have been less than impressive. Due to a negative information ratio, we can’t evaluate the fund’s return-generating consistency. However, alpha can help us out here. Only two funds had a worse alpha that the MLINX for the one-year period ended February 12. Its alpha was average for 2015. It seems that the fund’s portfolio is not yet aligned to withstand bouts of volatility. Investors should keep this in mind before making an investment decision regarding the fund. In the next article, we’ll look at the JPMorgan Large Cap Growth Fund – Class A (OLGAX).


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