If investors are looking at the Mutual Fund Equity Report fund category, American Funds AMCAP A (AMCPX) could be a potential option. AMCPX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
American Funds is responsible for AMCPX, and the company is based out of Los Angeles, CA. American Funds AMCAP A debuted in May of 1967. Since then, AMCPX has accumulated assets of about $31.65 billion, according to the most recently available information. A team of investment professionals is the fund’s current manager.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 7.13%, and is in the bottom 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 12.46%, which places it in the bottom 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. The standard deviation of AMCPX over the past three years is 20.14% compared to the category average of 15.75%. The standard deviation of the fund over the past 5 years is 18.98% compared to the category average of 15.5%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 0.98, the fund is likely to be as volatile as 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. AMCPX has generated a negative alpha over the past five years of -3.41, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Examining 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 primarily on equities that are traded in the United States.
This fund is currently holding about 92.14% stock in stocks, which have an average market capitalization of $232.64 billion. The fund has the heaviest exposure to the following market sectors:
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Technology
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Other
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Retail Trade
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Non-Durable
With turnover at about 28%, this fund is making fewer trades than comparable funds.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, AMCPX is a load fund. It has an expense ratio of 0.66% compared to the category average of 0.99%. AMCPX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $50.
Bottom Line
Overall, American Funds AMCAP A ( AMCPX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, American Funds AMCAP A ( AMCPX ) looks like a great potential choice for investors right now.
For additional information on the Mutual Fund Equity Report 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 AMCPX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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