QikReview: Mid-Cap Funds - Alger, Ariel

Continuing with the series of (401)k funds reviews, below are reviews of the Mid-Cap funds.

Alger MidCap Growth Institutional (ALMRX)

Category: Mid-Cap Growth
Rating: 3
Capital Gains Exposure: -40%
Assets: $0.912 bil
Expense Ratio: 1.17%
Turnover Ratio: 274%
Yield: 0.0%
Redemption Period: 0 days
Redemption Fee: 0%
3-Year Total Cost: $372
Minimum Investment: $0
Comments: Does not do very well during recessions, but comes back somewhat strongly. Has 99 holdings and has only 23% of assets in the top ten holdings. Not very expensive. This fund invests into Giant (4), Large (27), Medium (54), Small (12), and Micro (3) companies. It invests into the following sectors Software (10), Hardware (11), Healthcare (11), Consumer Services (8), Financial Services (8), Consumer Goods (8), Industrial Materials (17), and Energy (18). I'm not impressed with this fund because of its mediocre performance.
Grade: C-

Ariel (ARGFX)

Category: Mid-Cap Blend
Rating: 1
Capital Gains Exposure: -5%
Assets: $1.296 bil
Expense Ratio: 1.03%
Turnover Ratio: 25%
Yield: 0.47%
Redemption Period: 0 days
Redemption Fee: 0%
3-Year Total Cost: $328
Minimum Investment: $1,000
Comments: This is clearly a long-term oriented fund: it has only 32 holdings with a turnover of 25%. This fund invests into Medium (80) and Small (16) companies. It invests into the following sectors Media (6), Healthcare (7), Consumer Services (6), Business Services (18), Financials (26), Consumer Goods (20), and Industrial Materials (17). Ranking-wise, this fund is currently scratching the bottom of the barrel - it hasn't enjoyed any gains at the end of the '90s (although didn't lose much during the last recession either) and it hasn't experienced any kind of significant gains during this last bull market and now it lost over 40% year-to-date. That is some terrible performance. Of course, this may also mean that this fund will bounce back rather nicely if you start investing in it nice. I've looked at their holdings and they seem more solid than not (from the names that I recognized). In conclusion, this fund's defensive style severely limits its upside in the bull market and yet provides no protection in the bear market - so far this year it has lost more than 90% of the competing funds.
Grade: D+

Full List of Current Series of 401(k) Fund Reviews:

• Introduction and Large-Cap Funds - American Funds Growth, Dodge & Cox Stock, Putnam Equity Income, State Street Equity 500 Index Service
• Foreign Large-Cap Funds - AllianceBernstein International, American Funds EuroPacific Growth
• Mid-Cap Funds - Alger MidCap Growth Institutional, Ariel
• Moderate Allocation Funds - Dodge & Cox Balanced, George Putnam Fund of Boston
• Goldman Sachs High Yield, Morgan Stanley Institutional Small Growth
• Fund Picks and Allocation Targets