Having trouble finding an Allocation Balanced fund? American Funds Balanced R3 (RLBCX) is a possible starting point. RLBCX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
RLBCX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.
History of Fund/Manager
RLBCX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. Since American Funds Balanced R3 made its debut in July of 1975, RLBCX has garnered more than $3.09 billion in assets. The fund's current manager is a team of investment professionals.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 7.69%, and is in the top 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 9.72%, which places it in the top 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, RLBCX's standard deviation comes in at 7.01%, compared to the category average of 9.52%. The fund's standard deviation over the past 5 years is 7.23% compared to the category average of 9.57%. This makes the fund less volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market, RLBCX lost 37.2% and underperformed its peer group by 1%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. RLBCX has a 5-year beta of 0.59, which means it is likely to be less volatile than 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. RLBCX has generated a positive alpha over the past five years of 0.33, demonstrating that managers in this portfolio are skilled in picking 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, RLBCX is a no load fund. It has an expense ratio of 0.92% compared to the category average of 0.92%. Looking at the fund from a cost perspective, RLBCX is actually on par with its peers.
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 Balanced R3 ( RLBCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and on par fees, this fund looks like a somewhat average choice for investors right now.
Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (RLBCX): Fund Analysis Report
To read this article on Zacks.com click here.