Is American Funds Growth Fund of America A (AGTHX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Mutual Fund Equity Report funds, a place to start could be American Funds Growth Fund of America A (AGTHX). AGTHX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of AGTHX. Since American Funds Growth Fund of America A made its debut in December of 1973, AGTHX has garnered more than $104.66 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 7.55%, and is in the bottom third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 7.42%, 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. Over the past three years, AGTHX’s standard deviation comes in at 23.4%, compared to the category average of 17.47%. The standard deviation of the fund over the past 5 years is 20.26% compared to the category average of 15.29%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.04, so it is likely going to be more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. AGTHX’s 5-year performance has produced a negative alpha of -1.86, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

The mutual fund currently has 98.43% of its holdings in stocks, which have an average market capitalization of $309.78 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology

  • Retail Trade

  • Finance

Turnover is 30%, 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, AGTHX is a load fund. It has an expense ratio of 0.60% compared to the category average of 0.99%. So, AGTHX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $50.

Bottom Line

Overall, American Funds Growth Fund of America A ( AGTHX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, American Funds Growth Fund of America A ( AGTHX ) looks like a great potential choice for investors right now.

Want even more information about AGTHX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

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