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

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Large Cap Value fund seekers should consider taking a look at American Funds Washington Mutual Investors F (WSHFX - Free Report) . WSHFX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

WSHFX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds'high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of WSHFX. American Funds Washington Mutual Investors F made its debut in July of 1952, and since then, WSHFX has accumulated about $2.89 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 5.24%, and it sits in the top 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 3.19%, 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. Compared to the category average of 10.17%, the standard deviation of WSHFX over the past three years is 14.07%. The fund's standard deviation over the past 5 years is 12.77% compared to the category average of 10.06%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. WSHFX lost 48.95% in the most recent bear market and outperformed its peer group by 2%. This could mean that the fund is a better choice than comparable funds during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. WSHFX has a 5-year beta of 0.92, which means it 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. WSHFX has generated a negative alpha over the past five years of -1, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 largely on equities that are traded in the United States.

Right now, 84.22% of this mutual fund's holdings are stocks, with an average market capitalization of $218.21 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology
  3. Industrial Cyclical
Turnover is about 25%, so those in charge of the fund make fewer trades than its comparable peers.

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 0.65% compared to the category average of 1%. So, WSHFX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, American Funds Washington Mutual Investors F ( WSHFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good 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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