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Is American Funds Cap World Growth & Income R3 (RWICX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Global - Equity funds, you might want to consider passing on by American Funds Cap World Growth & Income R3 (RWICX - Free Report) as a possibility. RWICX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that RWICX is a Global - Equity option, an investment area loaded with different options. While Global - Equity mutual funds invest their assets in large markets--think the U.S., Europe, and Japan--they aren't limited by geography. Their investment technique is one that leverages the global economy in order to offer stable returns.

History of Fund/Manager

RWICX finds itself in the American Funds family, based out of Los Angeles, CA. Since American Funds Cap World Growth & Income R3 made its debut in March of 1993, RWICX has garnered more than $1.99 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 3.36%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 5.54%, which places it in the middle 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 RWICX over the past three years is 10.28% compared to the category average of 8.64%. The standard deviation of the fund over the past 5 years is 10.45% compared to the category average of 8.79%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In RWICX's case, the fund lost 51% in the most recent bear market and outperformed its peer group by 1.58%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 0.86, 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. RWICX has generated a negative alpha over the past five years of -3.71, demonstrating 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, RWICX is a no load fund. It has an expense ratio of 1.08% compared to the category average of 1.19%. RWICX 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 $250 and that each subsequent investment needs to be at $50.

Bottom Line

Overall, American Funds Cap World Growth & Income R3 ( RWICX ) 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 RWICX? 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. 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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