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

Global - Equity fund seekers should consider taking a look at American Funds New Perspective A ANWPX. ANWPX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

ANWPX is classified in the Global - Equity segment by Zacks, an area full of possibilities. Even though Global - Equity mutual funds invest in bigger markets like the U.S., Europe, and Japan, these kinds of funds aren't limited by geography. Rather, they offer an investment strategy that utilizes the global economy to provide stable returns.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of ANWPX. Since American Funds New Perspective A made its debut in March of 1973, ANWPX has garnered more than $40.53 billion in assets. The fund's current manager, a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 12.6%, 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 11.42%, 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. The standard deviation of ANWPX over the past three years is 10.45% compared to the category average of 8.77%. Over the past 5 years, the standard deviation of the fund is 10.11% compared to the category average of 10.56%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In ANWPX's case, the fund lost 49.08% in the most recent bear market and outperformed its peer group by 3.35%. This could mean that the fund is a better choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 0.95, 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 -1.92, which shows 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, ANWPX is a load fund. It has an expense ratio of 0.75% compared to the category average of 1.20%. 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.

Bottom Line

Overall, American Funds New Perspective A 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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