If investors are looking at the Global – Equity fund category, American Funds New Economy A (ANEFX) could be a potential option. ANEFX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
ANEFX is classified in the Global – Equity segment by Zacks, an area full of possibilities. Even though Global – Equity mutual funds invest in bigger markets like the U.S., Europe, and Japan, these kinds of funds aren’t limited by geography. Rather, they offer an investment strategy that utilizes the global economy to provide stable returns.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of ANEFX. The American Funds New Economy A made its debut in December of 1983 and ANEFX has managed to accumulate roughly $18.01 billion in assets, as of the most recently available information. A team of investment professionals is the fund’s current manager.
Of course, investors look for strong performance in funds. ANEFX has a 5-year annualized total return of 19.07% and it sits in the top 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 17.24%, which places it in the top 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, ANEFX’s standard deviation comes in at 18.26%, compared to the category average of 15.21%. Over the past 5 years, the standard deviation of the fund is 14.91% compared to the category average of 12.58%. This makes the fund more volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.91, which means it is hypothetically less volatile than the market at large. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. ANEFX’s 5-year performance has produced a positive alpha of 2.88, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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 principally on equities that are traded in the United States.
Currently, this mutual fund is holding 84.5% stock in stocks, with an average market capitalization of $306.31 billion. Turnover is 28%, which means this fund makes fewer trades than the average comparable fund.
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, ANEFX is a load fund. It has an expense ratio of 0.75% compared to the category average of 1.13%. Looking at the fund from a cost perspective, ANEFX 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.
Overall, American Funds New Economy A ( ANEFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds New Economy A ( ANEFX ) looks like a good potential choice for investors right now.
This could just be the start of your research on ANEFXin the Global – Equity category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.