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Is American Beacon London Company Income Equity Y (ABCYX) a Strong Mutual Fund Pick Right Now?

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Large Cap Value fund seekers should not consider taking a look at American Beacon London Company Income Equity Y (ABCYX - Free Report) at this time. ABCYX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

ABCYX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds'high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.

History of Fund/Manager

ABCYX is a part of the American Beacon family of funds, a company based out of Irving, TX. American Beacon London Company Income Equity Y made its debut in May of 2012, and since then, ABCYX has accumulated about $572.30 million in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 11.42%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 12.79%, 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. The standard deviation of ABCYX over the past three years is 8.97% compared to the category average of 9.08%. Looking at the past 5 years, the fund's standard deviation is 9.13% compared to the category average of 8.84%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.89, 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. ABCYX's 5-year performance has produced a negative alpha of -0.89, which means 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, ABCYX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.03%. ABCYX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $100,000 and that each subsequent investment needs to be at $50.

Bottom Line

Overall, American Beacon London Company Income Equity Y ( ABCYX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

Want even more information about ABCYX? 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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