Is American Funds Growth Fund of America C (GFACX) a Strong Mutual Fund Pick Right Now?

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Mutual Fund Equity Report fund seekers may want to consider taking a look at American Funds Growth Fund of America C (GFACX). GFACX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of GFACX. Since American Funds Growth Fund of America C made its debut in March of 2001, GFACX has garnered more than $4.07 billion in assets. A team of investment professionals is the fund’s current manager.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 11.17%, and is in the bottom 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 12.75%, 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. Compared to the category average of 15.48%, the standard deviation of GFACX over the past three years is 20.25%. Over the past 5 years, the standard deviation of the fund is 18.17% compared to the category average of 13.6%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. GFACX has a 5-year beta of 1.05, which means it is likely to be more volatile than the market average. 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. Over the past 5 years, the fund has a negative alpha of -2.34. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, GFACX is a no load fund. It has an expense ratio of 1.35% compared to the category average of 0.99%. Looking at the fund from a cost perspective, GFACX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Funds Growth Fund of America C ( GFACX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, American Funds Growth Fund of America C ( GFACX ) looks like a somewhat average choice for investors right now.

Don’t stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare GFACX to its peers as well 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.

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