Is American Funds New Perspective F1 (NPFFX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Global – Equity fund might consider looking past American Funds New Perspective F1 (NPFFX). NPFFX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes NPFFX 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 NPFFX. Since American Funds New Perspective F1 made its debut in March of 1973, NPFFX has garnered more than $1.33 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 10.77%, and it sits in the top 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 1.9%, which places it in the middle 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. Over the past three years, NPFFX’s standard deviation comes in at 18.48%, compared to the category average of 14.42%. Over the past 5 years, the standard deviation of the fund is 19.5% compared to the category average of 15.41%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.02, so investors should note that it is hypothetically as volatile as 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. With a negative alpha of -2.21, 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, NPFFX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 0.96%. From a cost perspective, NPFFX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $250 and that each subsequent investment needs to be at $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 F1 ( NPFFX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

For additional information on the Global – Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into NPFFX too 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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