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

If you have been looking for Mutual Fund Equity Report fund category, a potential starting could be American Funds Growth Fund of America A (AGTHX). AGTHX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

AGTHX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. The American Funds Growth Fund of America A made its debut in December of 1973 and AGTHX has managed to accumulate roughly $125.05 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 11.28%, and is in the bottom 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 10.98%, 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. The standard deviation of AGTHX over the past three years is 21.61% compared to the category average of 15.64%. The fund's standard deviation over the past 5 years is 19.19% compared to the category average of 13.99%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.06, the fund 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 -1.78, which shows 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 mostly on equities that are traded in the United States.

Right now, 92.19% of this mutual fund's holdings are stocks, which have an average market capitalization of $443.85 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Retail Trade

  3. Finance

Turnover is 30%, which means, on average, the fund makes fewer trades than its comparable peers.

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, AGTHX is a load fund. It has an expense ratio of 0.60% compared to the category average of 0.99%. From a cost perspective, AGTHX is actually cheaper than its peers.

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

Bottom Line

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

For additional information on the Mutual Fund Equity Report area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into AGTHX too 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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