If you’ve been stuck searching for Allocation Balanced funds, consider American Funds Balanced A (ABALX) as a possibility. ABALX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
ABALX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of ABALX. American Funds Balanced A made its debut in September of 1932, and since then, ABALX has accumulated about $88.07 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 10.7%, 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 9.12%, 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. ABALX’s standard deviation over the past three years is 10.69% compared to the category average of 14.84%. The fund’s standard deviation over the past 5 years is 8.81% compared to the category average of 12.38%. This makes the fund less volatile than its peers over the past half-decade.
The fund has a 5-year beta of 0.57, so investors should note that it is hypothetically less volatile than 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. With a positive alpha of 0.54, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, ABALX is a load fund. It has an expense ratio of 0.58% compared to the category average of 0.89%. ABALX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $250 and that each subsequent investment needs to be at $50.
Overall, American Funds Balanced A ( ABALX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
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