Is American Funds Growth Portfolio A (GWPAX) a Strong Mutual Fund Pick Right Now?
Any investors hoping to find an All Cap Growth fund might consider looking past American Funds Growth Portfolio A (GWPAX). GWPAX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Tickers is classified in the All Cap Growth segment by Zacks, an area full of possibilities. All Cap Growth funds have holdings across small, medium, and large-cap levels in order to increase diversification. As long as stocks demonstrate strong growth characteristics, these portfolios will invest in various equity securities regardless of company size.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of GWPAX. The American Funds Growth Portfolio A made its debut in May of 2012 and GWPAX has managed to accumulate roughly $3.97 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 9.33%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.37%, 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. Over the past three years, GWPAX's standard deviation comes in at 10.62%, compared to the category average of 9.1%. Over the past 5 years, the standard deviation of the fund is 11.06% compared to the category average of 9.46%. This makes the fund more volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.94, which means it is hypothetically less 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. GWPAX's 5-year performance has produced a negative alpha of -1.42, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, GWPAX is a load fund. It has an expense ratio of 0.36% compared to the category average of 1.06%. So, GWPAX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $250, investors should also note that each subsequent investment needs to be at least $50.
Overall, American Funds Growth Portfolio A ( GWPAX ) has a low Zacks Mutual Fund rank, weak performance, average downside risk, and lower fees compared to its peers.
For additional information on the All Cap Growth 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 GWPAX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
Click to get this free report
Get Your Free (GWPAX): Fund Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.