If investors are looking at the Allocation Balanced fund category, American Funds Balanced A (ABALX) could be a potential option. ABALX carries 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
ABALX finds itself in the American Funds family, based out of Los Angeles, CA. American Funds Balanced A made its debut in September of 1932, and since then, ABALX has accumulated about $98.62 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
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 11.09%, 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 11.58%, 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 ABALX over the past three years is 10.77% compared to the category average of 14.9%. The standard deviation of the fund over the past 5 years is 8.76% compared to the category average of 12.29%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.57, 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. ABALX has generated a positive alpha over the past five years of 0.32, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, ABALX is a load fund. It has an expense ratio of 0.57% compared to the category average of 0.89%. From a cost perspective, ABALX is actually cheaper than its peers.
This fund requires a minimum initial investment of $250, and each subsequent investment should be at least $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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