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Is American Funds Mutual Fund A (AMRMX) a Strong Mutual Fund Pick Right Now?

Zacks.com logo Zacks.com 12/29/2021

Any investors hoping to find a Mutual Fund Equity Report fund could think about starting with American Funds Mutual Fund A (AMRMX). AMRMX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

American Funds is responsible for AMRMX, and the company is based out of Los Angeles, CA. American Funds Mutual Fund A made its debut in February of 1950, and since then, AMRMX has accumulated about $33.26 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. AMRMX has a 5-year annualized total return of 11.91% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 11.64%, 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 AMRMX over the past three years is 14.71% compared to the category average of 15.43%. The standard deviation of the fund over the past 5 years is 12.24% compared to the category average of 12.75%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.77, the fund is likely to be less 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. The fund has produced a negative alpha over the past 5 years of -1.82, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 primarily on equities that are traded in the United States.

This fund is currently holding about 77.78% stock in stocks, which have an average market capitalization of $240.19 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Non-Durable
  4. Industrial Cyclical
Turnover is 30%, which means this fund makes fewer trades than the average comparable fund.

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, AMRMX is a load fund. It has an expense ratio of 0.59% compared to the category average of 1%. AMRMX is actually cheaper than its peers when you consider factors like cost.

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 Mutual Fund A ( AMRMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, American Funds Mutual Fund A ( AMRMX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, make sure to go to www.zacks.com/funds/mutual-funds 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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