Is American Funds EuroPacific Growth A (AEPGX) a Strong Mutual Fund Pick Right Now?

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Looking for a Non US – Equity fund? You may want to consider American Funds EuroPacific Growth A (AEPGX) as a possible option. AEPGX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify AEPGX in the Non US – Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US – Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of AEPGX. American Funds EuroPacific Growth A made its debut in April of 1984, and since then, AEPGX has accumulated about $24.36 billion in assets, per the most up-to-date date available. The fund’s current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 14.3%, and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 9.92%, which places it in the middle 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. Compared to the category average of 15.13%, the standard deviation of AEPGX over the past three years is 18.81%. The fund’s standard deviation over the past 5 years is 15.73% compared to the category average of 12.66%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.92, so investors should note that it is hypothetically less volatile than the market at large. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a negative alpha over the past 5 years of -0.89, which shows 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, AEPGX is a load fund. It has an expense ratio of 0.84% compared to the category average of 1.19%. Looking at the fund from a cost perspective, AEPGX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Funds EuroPacific Growth A ( AEPGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on the Non US – Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into AEPGX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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