Is American Funds New World A (NEWFX) a good mutual fund choice right now?

On Are you looking for a mutual fund equity report fund? Starting with American Funds New World A (NEWFX) is a possibility. NEWFX carries a Zacks mutual fund rating of 2 (buy), which is based on nine predictor factors such as size, cost and past performance.

Fund/manager history

American Funds is based in Los Angeles, California and is the manager of NEWFX. Since American Funds New World A debuted in June 1999, NEWFX has accumulated over $17.04 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors are naturally looking for high performance funds. This fund has generated a 5-year annualized total return of 6.49% and is in the top third of its peers in the category. But if you’re looking for a shorter time frame, it’s also worth looking at its 3-year annualized total return of 7.46%, which puts it in the top third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 15.2%, NEWFX’s standard deviation over the past three years is 18.48%. The fund’s standard deviation over the last 5 years is 16.1% compared to the category average of 13.59%. 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 0.86, which means it is hypothetically less volatile than the market as a whole. Since alpha represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, it is also worth paying attention to this measure. NEWFX has generated a negative alpha of -4.49 over the past five years, demonstrating that managers in this portfolio struggle to pick stocks that generate returns above the benchmark.

Expenses

Costs are increasingly important for investing in mutual funds, especially as competition intensifies in this market. And all other things being equal, a lower-cost product will outperform its otherwise identical counterpart, so it’s essential for investors to take a closer look at these metrics. In terms of fees, NEWFX is a load fund. It has an expense ratio of 0.96% compared to the category average of 1.15%. Looking at the fund from a cost perspective, NEWFX is actually cheaper than its peers.

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

Conclusion

Overall, American Funds New World A (NEWFX) has a high Zacks Mutual Fund ranking, and in conjunction with its relatively strong performance, medium downside risk and low fees, this fund seems like a good potential choice for investors right now.

Your search for the Mutual Fund Stock Report segment doesn’t have to stop here. You can check out all of the great mutual fund tools we offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well as additional information. For analysis of the rest of your portfolio, be sure to visit Zacks.com for our comprehensive suite of tools that will help you investigate all of your stocks and funds in one place.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Dolores W. Simon