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

Mutual Fund Report for GFAFX

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This story originally appeared on Zacks

If you have been looking for Mutual Fund Equity Report fund category, a potential starting could be American Funds Growth Fund of America F (GFAFX). GFAFX 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 GFAFX. The American Funds Growth Fund of America F made its debut in November of 1973 and GFAFX has managed to accumulate roughly $7.75 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 20.74%, and is 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 24.36%, 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 GFAFX over the past three years is 19.03%. Over the past 5 years, the standard deviation of the fund is 16.21% 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 1.01, so investors should note that it is hypothetically as volatile as 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. Over the past 5 years, the fund has a positive alpha of 2.4. This means 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 principally on equities that are traded in the United States.

Currently, this mutual fund is holding 95.19% stock in stocks, which have an average market capitalization of $493.15 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Finance
  4. Non-Durable

Turnover is 24%, which means this fund makes 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, GFAFX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 1.02%. Looking at the fund from a cost perspective, GFAFX 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 Growth Fund of America F ( GFAFX ) 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 F ( GFAFX ) looks like a somewhat average choice for investors right now.

Want even more information about GFAFX? 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.



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