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Is American Funds Growth Fund of America F2 (GFFFX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for GFFFX

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This story originally appeared on Zacks

Having trouble finding a Mutual Fund Equity Report fund? American Funds Growth Fund of America F2 (GFFFX) is a possible starting point. GFFFX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

- Zacks

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of GFFFX. American Funds Growth Fund of America F2 made its debut in August of 2008, and since then, GFFFX has accumulated about $32.53 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 22.46%, and it sits 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 26.64%, 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. Compared to the category average of 15.41%, the standard deviation of GFFFX over the past three years is 18.83%. Over the past 5 years, the standard deviation of the fund is 16.1% compared to the category average of 12.74%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1, so investors should note that it is hypothetically as volatile as 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. The fund has produced a positive alpha over the past 5 years of 3.05, which shows that managers in this portfolio are skilled in picking 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.

Currently, this mutual fund is holding 93.37% stock in stocks, and these companies have an average market capitalization of $398.30 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Finance

With turnover at about 24%, this fund makes fewer trades than the average comparable fund.

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, GFFFX is a no load fund. It has an expense ratio of 0.40% compared to the category average of 1.02%. GFFFX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $250, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Funds Growth Fund of America F2 ( GFFFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, American Funds Growth Fund of America F2 ( GFFFX ) looks like a somewhat average choice for investors right now.

This could just be the start of your research on GFFFXin the Mutual Fund Equity Report 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.



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