Technology

Is American Funds AMCAP A (AMCPX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Large Cap Growth fund? American Funds AMCAP A (AMCPX) is a possible starting point. AMCPX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

AMCPX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of AMCPX. American Funds AMCAP A debuted in May of 1967. Since then, AMCPX has accumulated assets of about $30.23 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.01%, and it sits 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 11.47%, 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. AMCPX's standard deviation over the past three years is 12.51% compared to the category average of 9.89%. Over the past 5 years, the standard deviation of the fund is 12.4% compared to the category average of 9.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In AMCPX's case, the fund lost 48.62% in the most recent bear market and outperformed its peer group by 0%. This could mean that the fund is an on par choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 0.98, so investors should note that it is hypothetically as volatile as 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. AMCPX has generated a negative alpha over the past five years of -2.34, demonstrating that 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 mostly on equities that are traded in the United States.

As of the last filing date, the mutual fund has 97.54% of its assets in stocks, with an average market capitalization of $134.47 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other

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 1.08%. AMCPX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $250, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

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

For additional information on the Large 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 AMCPX 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.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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