Is American Funds Investor Company of America A (AIVSX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Large Cap Blend fund category, make sure to pass over American Funds Investor Company of America A (AIVSX). AIVSX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
AIVSX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a " buy and hold " mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.
History of Fund/Manager
AIVSX finds itself in the American Funds family, based out of Los Angeles, CA. American Funds Investor Company of America A debuted in December of 1933. Since then, AIVSX has accumulated assets of about $60.87 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 has delivered a 5-year annualized total return of 7.7%, and is in the middle 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 10.72%, 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. Compared to the category average of 9.8%, the standard deviation of AIVSX over the past three years is 11.1%. The standard deviation of the fund over the past 5 years is 11.32% compared to the category average of 9.82%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. AIVSX lost 47.16% in the most recent bear market and outperformed its peer group by 2%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, with a 5-year beta of 0.92, the fund 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. AIVSX has generated a negative alpha over the past five years of -2.06, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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.
Right now, 82.82% of this mutual fund's holdings are stocks, with an average market capitalization of $210.37 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Other
Non-Durable
Finance
With turnover at about 38%, this fund makes fewer trades than its comparable peers.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, AIVSX is a load fund. It has an expense ratio of 0.58% compared to the category average of 1.03%. AIVSX 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 Investor Company of America A ( AIVSX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, American Funds Investor Company of America A ( AIVSX ) looks like a somewhat weak choice for investors right now.
Your research on the Large Cap Blend 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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