Is American Funds Mutual Fund A (AMRMX) a Strong Mutual Fund Pick Right Now?
Large Cap Value fund seekers should consider taking a look at American Funds Mutual Fund A (AMRMX). AMRMX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
AMRMX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream fund these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds'high growth opportunity are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
History of Fund/Manager
American Funds is responsible for AMRMX, and the company is based out of Los Angeles, CA. Since American Funds Mutual Fund A made its debut in February of 1950, AMRMX has garnered more than $25.23 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 9.53%, 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 11.49%, 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. Compared to the category average of 8.59%, the standard deviation of AMRMX over the past three years is 7.93%. Looking at the past 5 years, the fund's standard deviation is 8.79% compared to the category average of 8.75%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
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. AMRMX lost 43.29% in the most recent bear market and outperformed its peer group by 7.41%. This could mean that the fund is a better choice than comparable funds during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.85, 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. AMRMX has generated a positive alpha over the past five years of 0.07, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
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, AMRMX is a load fund. It has an expense ratio of 0.58% compared to the category average of 1.03%. AMRMX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $50.
Bottom Line
Overall, American Funds Mutual Fund A ( AMRMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Large Cap Value 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 AMRMX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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