Is American Funds Cap World Growth & Income A (CWGIX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Global – Equity fund category, make sure to pass over American Funds Cap World Growth & Income A (CWGIX). CWGIX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Load Error

Objective

We note that CWGIX is a Global – Equity option, an investment area loaded with different options. While Global – Equity mutual funds invest their assets in large markets–think the U.S., Europe, and Japan–they aren’t limited by geography. Their investment technique is one that leverages the global economy in order to offer stable returns.

History of Fund/Manager

CWGIX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. The American Funds Cap World Growth & Income A made its debut in March of 1993 and CWGIX has managed to accumulate roughly $55.07 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

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 12.85%, and it sits in the middle 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 11.3%, 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. Over the past three years, CWGIX’s standard deviation comes in at 16.92%, compared to the category average of 15.15%. Looking at the past 5 years, the fund’s standard deviation is 13.76% compared to the category average of 12.57%. 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 0.87, 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. CWGIX’s 5-year performance has produced a negative alpha of -2.03, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, CWGIX is a load fund. It has an expense ratio of 0.77% compared to the category average of 1.14%. So, CWGIX is actually cheaper than its peers from a cost perspective.

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

Bottom Line

Overall, American Funds Cap World Growth & Income A ( CWGIX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.

Want even more information about CWGIX? 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. 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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