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Is American Funds Cap Income Builder A (CAIBX) a Strong Mutual Fund Pick Right Now?
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If you have been looking for Large Cap Blend funds, it would not be wise to start your search with American Funds Cap Income Builder A (CAIBX - Free Report) . CAIBX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
CAIBX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.
History of Fund/Manager
CAIBX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. Since American Funds Cap Income Builder A made its debut in July of 1987, CAIBX has garnered more than $70.30 billion in assets. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. CAIBX has a 5-year annualized total return of 7.6% and it sits in the bottom 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 5.82%, 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. CAIBX's standard deviation over the past three years is 7.39% compared to the category average of 8.72%. The standard deviation of the fund over the past 5 years is 7.65% compared to the category average of 9.9%. This makes the fund less 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. In CAIBX's case, the fund lost 40.71% in the most recent bear market and outperformed its peer group by 8.96%. This could mean that the fund is a better choice than comparable funds during a bear market.
Even still, the fund has a 5-year beta of 0.65, so investors should note that 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. The fund has produced a negative alpha over the past 5 years of -2.37, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, CAIBX is a load fund. It has an expense ratio of 0.59% compared to the category average of 1%. CAIBX 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 Cap Income Builder A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Want even more information about CAIBX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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Is American Funds Cap Income Builder A (CAIBX) a Strong Mutual Fund Pick Right Now?
If you have been looking for Large Cap Blend funds, it would not be wise to start your search with American Funds Cap Income Builder A (CAIBX - Free Report) . CAIBX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
CAIBX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.
History of Fund/Manager
CAIBX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. Since American Funds Cap Income Builder A made its debut in July of 1987, CAIBX has garnered more than $70.30 billion in assets. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. CAIBX has a 5-year annualized total return of 7.6% and it sits in the bottom 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 5.82%, 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. CAIBX's standard deviation over the past three years is 7.39% compared to the category average of 8.72%. The standard deviation of the fund over the past 5 years is 7.65% compared to the category average of 9.9%. This makes the fund less 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. In CAIBX's case, the fund lost 40.71% in the most recent bear market and outperformed its peer group by 8.96%. This could mean that the fund is a better choice than comparable funds during a bear market.
Even still, the fund has a 5-year beta of 0.65, so investors should note that 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. The fund has produced a negative alpha over the past 5 years of -2.37, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, CAIBX is a load fund. It has an expense ratio of 0.59% compared to the category average of 1%. CAIBX 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 Cap Income Builder A has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
Want even more information about CAIBX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.