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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've been stuck searching for Large Cap Blend funds, consider American Funds Cap Income Builder A (CAIBX - Free Report) as a possibility. CAIBX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that CAIBX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of CAIBX. American Funds Cap Income Builder A debuted in July of 1987. Since then, CAIBX has accumulated assets of about $65.40 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 3.55%, 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 4.92%, 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 CAIBX over the past three years is 7.01% compared to the category average of 9.77%. Looking at the past 5 years, the fund's standard deviation is 7.75% compared to the category average of 9.91%. This makes the fund less 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. In CAIBX's case, the fund lost 40.71% in the most recent bear market and outperformed its peer group by 9%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 0.55, the fund is likely to be less volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -2.31, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, CAIBX is a load fund. It has an expense ratio of 0.60% compared to the category average of 1.03%. From a cost perspective, CAIBX is actually cheaper than 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.
Bottom Line
Overall, American Funds Cap Income Builder A ( CAIBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, American Funds Cap Income Builder A ( CAIBX ) looks like a great potential choice for investors right now.
This could just be the start of your research on CAIBXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.
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Is American Funds Cap Income Builder A (CAIBX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Large Cap Blend funds, consider American Funds Cap Income Builder A (CAIBX - Free Report) as a possibility. CAIBX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that CAIBX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of CAIBX. American Funds Cap Income Builder A debuted in July of 1987. Since then, CAIBX has accumulated assets of about $65.40 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 3.55%, 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 4.92%, 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 CAIBX over the past three years is 7.01% compared to the category average of 9.77%. Looking at the past 5 years, the fund's standard deviation is 7.75% compared to the category average of 9.91%. This makes the fund less 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. In CAIBX's case, the fund lost 40.71% in the most recent bear market and outperformed its peer group by 9%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 0.55, the fund is likely to be less volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -2.31, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, CAIBX is a load fund. It has an expense ratio of 0.60% compared to the category average of 1.03%. From a cost perspective, CAIBX is actually cheaper than 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.
Bottom Line
Overall, American Funds Cap Income Builder A ( CAIBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, American Funds Cap Income Builder A ( CAIBX ) looks like a great potential choice for investors right now.
This could just be the start of your research on CAIBXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.