Is American Funds Global Growth A (PGGAX) a Strong Mutual Fund Pick Right Now?

view original post

If investors are looking at the Global – Equity fund category, American Funds Global Growth A (PGGAX) could be a potential option. PGGAX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Load Error

Objective

Zacks categorizes PGGAX as Global – Equity, which is a segment packed with options. Global – Equity mutual funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. They also provide an investment technique that leverages the diverse nature of the global economy in the hopes of providing a stable return.

History of Fund/Manager

PGGAX finds itself in the American Funds family, based out of Los Angeles, CA. American Funds Global Growth A made its debut in May of 2012, and since then, PGGAX has accumulated about $3.13 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 15.33%, 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 15.37%, 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. Compared to the category average of 15.32%, the standard deviation of PGGAX over the past three years is 18.73%. Looking at the past 5 years, the fund’s standard deviation is 15.15% compared to the category average of 12.66%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.94, so investors should note that 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. The fund has produced a negative alpha over the past 5 years of -0.42, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, PGGAX is a load fund. It has an expense ratio of 0.36% compared to the category average of 1.13%. PGGAX is actually cheaper than its peers when you consider factors like cost.

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

Bottom Line

Overall, American Funds Global Growth A ( PGGAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Global – Equity 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 PGGAX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

Continue Reading

Related Posts