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Is American Funds Washington Mutual Investors F (WSHFX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is American Funds Washington Mutual Investors F (WSHFX - Free Report) . WSHFX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

Large Cap Value mutual funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value; this value investing strategy often leads to low P/E ratios and high dividend yields, though growth levels are often curtailed. The high-growth opportunity of these funds are slowed even further, as large-cap securities are generally in stable industries with low to moderate growth prospects. Therefore, Large Cap Value funds are usually more appealing to investors who are interested in a stable income stream.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of WSHFX. The American Funds Washington Mutual Investors F made its debut in July of 1952 and WSHFX has managed to accumulate roughly $2.29 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. WSHFX has a 5-year annualized total return of 17.54% 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 9.12%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 WSHFX over the past three years is 14.3% compared to the category average of 14.28%. Looking at the past 5 years, the fund's standard deviation is 14.68% compared to the category average of 15.27%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.83, so investors should note that it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. WSHFX's 5-year performance has produced a positive alpha of 1.51, which means 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, WSHFX is a no load fund. It has an expense ratio of 0.63% compared to the category average of 0.94%. Looking at the fund from a cost perspective, WSHFX is actually cheaper than its peers.

This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $50.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, American Funds Washington Mutual Investors F ( WSHFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a great potential choice for investors right now.

This could just be the start of your research on WSHFXin the Large Cap Value 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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