Is American Funds New Perspective A (ANWPX) a Strong Mutual Fund Pick Right Now?

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On the lookout for a Global – Equity fund? Starting with American Funds New Perspective A (ANWPX) should not be a possibility at this time. ANWPX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes ANWPX 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

American Funds is based in Los Angeles, CA, and is the manager of ANWPX. American Funds New Perspective A made its debut in March of 1973, and since then, ANWPX has accumulated about $51.22 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 12.25%, 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 4.28%, which places it in the bottom third during this time-frame.

It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.

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 ANWPX over the past three years is 18.51% compared to the category average of 14.45%. The fund’s standard deviation over the past 5 years is 19.4% compared to the category average of 15.36%. 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 1.02, so it is likely going to be as volatile as 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. ANWPX has generated a negative alpha over the past five years of -2.33, demonstrating that 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, ANWPX is a load fund. It has an expense ratio of 0.75% compared to the category average of 0.96%. So, ANWPX is actually cheaper than its peers from a cost perspective.

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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively strong performance, average downside risk, and lower fees, American Funds New Perspective A ( ANWPX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

This could just be the start of your research on ANWPXin 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. 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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