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 Quick Quote WSHFX - Free Report) . WSHFX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine 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. Since American Funds Washington Mutual Investors F made its debut in July of 1952, WSHFX has garnered more than $2.65 billion in assets. A team of investment professionals is the fund's current manager.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 9.55%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 12.67%, which places it in the top 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 WSHFX over the past three years is 9.29% compared to the category average of 9.25%. The standard deviation of the fund over the past 5 years is 10.16% compared to the category average of 9.17%. This makes the fund more volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. WSHFX lost 48.95% in the most recent bear market and outperformed its peer group by 1.78%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 0.89, so it is likely going to be less volatile than 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. With a negative alpha of -0.18, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 primarily on equities that are traded in the United States.
Currently, this mutual fund is holding 94.79% stock in stocks, which have an average market capitalization of $185.22 billion. The fund has the heaviest exposure to the following market sectors:
Finance Technology Industrial Cyclical
With turnover at about 25%, this fund makes fewer trades than comparable funds.
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 0.65% compared to the category average of 1%. So, WSHFX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $250, investors should also note that each subsequent investment needs to be at least $50.
Overall, American Funds Washington Mutual Investors F ( WSHFX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on the Large Cap Value area of the mutual fund world, make sure to check out
www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into WSHFX too 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.