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Is American Funds New Economy F2 (NEFFX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for NEFFX

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This story originally appeared on Zacks

If you have been looking for Mutual Fund Equity Report funds, a place to start could be American Funds New Economy F2 (NEFFX). NEFFX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

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History of Fund/Manager

NEFFX finds itself in the American Funds family, based out of Los Angeles, CA. Since American Funds New Economy F2 made its debut in August of 2008, NEFFX has garnered more than $2.82 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. NEFFX has a 5-year annualized total return of 19.32% 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 20.41%, 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. Over the past three years, NEFFX's standard deviation comes in at 17.75%, compared to the category average of 15.34%. The fund's standard deviation over the past 5 years is 15.38% compared to the category average of 12.67%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.92, which means 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. NEFFX has generated a positive alpha over the past five years of 2.53, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

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 principally on equities that are traded in the United States.

This fund is currently holding about 82.63% stock in stocks, which have an average market capitalization of $360.21 billion. Turnover is about 28%, so those in charge of the fund make fewer trades than the average comparable fund.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, NEFFX is a no load fund. It has an expense ratio of 0.52% compared to the category average of 1.13%. Looking at the fund from a cost perspective, NEFFX is actually cheaper than its peers.

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 New Economy F2 ( NEFFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds New Economy F2 ( NEFFX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.



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