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If investors are focused on the large-cap growth fund category, American Funds Growth Fund of America A (AGTHX – Free Report) could be a potential option. AGTHX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on a variety of predictive factors including size, cost, and past performance.
objective
AGTHX is part of the large-cap growth section, and there are many other possible options in this segment. Large Cap Growth mutual funds buy shares in a number of large U.S. companies that are expected to develop and grow at a faster pace than other large cap stocks. Typically, companies with a market capitalization of more than $10 billion are considered large-cap stocks.
History of fund managers
AGTHX is part of the American Funds family based in Los Angeles, California. Since American Fund Growth Fund of America A was founded in December 1973, AGTHX has amassed assets in excess of $116.39 billion. A team of investment professionals is the current manager of the Fund.
performance
Clearly, what investors are looking for from these funds is superior performance relative to other funds. This fund has achieved a total return of 13.25% per year over his five years, ranking him third from the bottom among funds in its category. Investors who prefer analysis over shorter time periods should note that the company’s three-year annualized total return is his 4.89%. This ranks in the bottom third within this period.
It is important to note that product returns do not reflect all costs. Unreflected fees reduce your revenue.Total return does not reflect the return of the fund [%] Sales commission. Total revenue would have been even lower if sales commissions had been included.
When looking at a fund’s performance, it’s also important to look at the standard deviation of returns. The lower the standard deviation, the lower the fund’s volatility. The standard deviation of his AGTHX over the past three years is 19.8%, compared to the category average of 14.63%. The fund’s standard deviation over the past five years is 20% compared to the category average of 15.49%. As a result, the fund’s volatility has increased relative to its peers over the past five years.
Risk factor
This fund has a five-year beta of 1.05, so investors should be wary of assuming this fund is more volatile than the overall market. Alpha is an additional metric to consider because it represents the performance of your portfolio on a risk-adjusted basis compared to a benchmark (in this case, the S&P 500). This fund has generated negative alpha over the past five years. -1.21. This indicates that the managers of this portfolio find it difficult to select securities that produce returns that exceed the benchmark.
Holdings
Researching mutual fund holdings is also a valuable exercise. This can tell you how managers are applying the prescribed methodology and whether there are any inherent biases in their approach. This particular fund focuses primarily on stocks traded in the United States.
The fund currently owns about 90.5% of the shares, with an average market capitalization of $410.97 billion. The fund has the highest exposure to the following market sectors:
- technology
- finance
- retail industry
The fund’s turnover is around 31%, so the fund manager trades less than comparable funds.
expenses
Cost is becoming increasingly important when investing in mutual funds, especially as competition in this market increases. And all things being equal, lower-priced products outperform otherwise identical products, so it’s important for investors to take a closer look at these metrics. Regarding fees, AGTHX is a load fund. The expense ratio is 0.63%, compared to the category average of 0.96%. When you consider factors such as cost, AGTHX is actually cheaper than other products.
Investors should also note that the minimum initial investment in the product is $250, with each subsequent investment required of $50.
Fees charged by investment advisors are not taken into account. If they are included, there will be fewer returns.
conclusion
Overall, American Funds Growth Fund of America A (AGTHX) ranks highly among Zacks mutual funds despite relatively weak performance, average downside risk, and low fees. and therefore appears to be a great option for investors at the moment.
To learn more about this product or compare it to other mutual funds in Large Cap Growth, be sure to visit www.zacks.com/funds/mutual-funds for additional information. If you’re interested in investing in stocks, be sure to also check out the Zacks Rank and suite of tools for new and professional investors alike.
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