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

If you've been stuck searching for Global - Equity funds, consider American Funds New Perspective F (NPFFX) as a possibility. NPFFX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine 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. American Funds New Perspective F debuted in March of 1973. Since then, NPFFX has accumulated assets of about $1.83 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.

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Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.02%, and is 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 8.55%, 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 NPFFX over the past three years is 10.77% compared to the category average of 8.87%. The standard deviation of the fund over the past 5 years is 10.8% compared to the category average of 8.66%. This makes the fund more 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 NPFFX's case, the fund lost 49.06% in the most recent bear market and underperformed comparable funds by 3.38%. This might suggest that the fund is a worse choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. NPFFX has a 5-year beta of 0.97, which means it is likely to be as volatile as the market average. 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. Over the past 5 years, the fund has a negative alpha of -2.63. This means 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, NPFFX is a no load fund. It has an expense ratio of 0.82% compared to the category average of 1.19%. NPFFX 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 New Perspective F ( NPFFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds New Perspective F ( NPFFX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Global - Equity funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare NPFFX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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