Is American funds growth fund of America C (GFACX) a strong mutual fund pick right now?

If you’ve been stuck searching for Large Cap Growth funds, consider American Funds Growth Fund of America C (GFACX – Free Report) as a possibility. GFACX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

GFACX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of fund/manager

GFACX finds itself in the American Funds family, based out of Los Angeles, CA. American Funds Growth Fund of America C debuted in March of 2001. Since then, GFACX has accumulated assets of about $4.04 billion, according to the most recently available information. A team of investment professionals is the fund’s current manager.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 10.96%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 27.36%, which places it in the middle third during this time-frame.

It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.

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, GFACX’s standard deviation comes in at 14.67%, compared to the category average of 11.45%. The standard deviation of the fund over the past 5 years is 17.46% compared to the category average of 12.96%. This makes the fund more volatile than its peers over the past half-decade.

Risk factors

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. GFACX has a 5-year beta of 1.1, which means it is likely to be more volatile than the market average. 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 negative alpha over the past 5 years of -3.8, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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.

This fund is currently holding about 81% in stocks, with an average market capitalization of $587.03 billion. The fund has the heaviest exposure to the following market sectors:

• Technology.
• Finance.
• Retail Trade.

Turnover is about 32%, so those in charge of the fund make fewer trades than its comparable peers.

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, GFACX is a no load fund and it has an expense ratio of 1.35%.

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

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.