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Is American Funds Growth Fund of America C (GFACX) a Strong Mutual Fund Pick Right Now?
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Large Cap Growth fund seekers should not consider taking a look at American Funds Growth Fund of America C (GFACX - Free Report) at this time. GFACX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
GFACX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of GFACX. Since American Funds Growth Fund of America C made its debut in March of 2001, GFACX has garnered more than $4.13 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 10.64%, 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 14.36%, 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 9.89%, the standard deviation of GFACX over the past three years is 13.11%. Over the past 5 years, the standard deviation of the fund is 12.75% compared to the category average of 9.9%. 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. In GFACX's case, the fund lost 49.29% in the most recent bear market and outperformed its peer group by 0%. This makes the fund a possibly on par choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 1.02, so it is likely going to be as volatile as the market at large. 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. Over the past 5 years, the fund has a negative alpha of -0.37. This means 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.
Currently, this mutual fund is holding 96.97% stock in stocks, which have an average market capitalization of $220.15 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Finance
Other
Turnover is 36%, which means, on average, the 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, GFACX is a no load fund. It has an expense ratio of 1.41% compared to the category average of 1.08%. GFACX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.
Bottom Line
Overall, American Funds Growth Fund of America C ( GFACX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, American Funds Growth Fund of America C ( GFACX ) looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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 Growth Fund of America C (GFACX) a Strong Mutual Fund Pick Right Now?
Large Cap Growth fund seekers should not consider taking a look at American Funds Growth Fund of America C (GFACX - Free Report) at this time. GFACX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
GFACX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of GFACX. Since American Funds Growth Fund of America C made its debut in March of 2001, GFACX has garnered more than $4.13 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 10.64%, 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 14.36%, 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 9.89%, the standard deviation of GFACX over the past three years is 13.11%. Over the past 5 years, the standard deviation of the fund is 12.75% compared to the category average of 9.9%. 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. In GFACX's case, the fund lost 49.29% in the most recent bear market and outperformed its peer group by 0%. This makes the fund a possibly on par choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 1.02, so it is likely going to be as volatile as the market at large. 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. Over the past 5 years, the fund has a negative alpha of -0.37. This means 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.
Currently, this mutual fund is holding 96.97% stock in stocks, which have an average market capitalization of $220.15 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Finance
- Other
Turnover is 36%, which means, on average, the 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, GFACX is a no load fund. It has an expense ratio of 1.41% compared to the category average of 1.08%. GFACX is actually more expensive than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.
Bottom Line
Overall, American Funds Growth Fund of America C ( GFACX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, American Funds Growth Fund of America C ( GFACX ) looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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.