Is American Funds EuroPacific Growth A (AEPGX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Non US - Equity fund? American Funds EuroPacific Growth A AEPGX is a potential starting point. AEPGX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify AEPGX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

American Funds is responsible for AEPGX, and the company is based out of Los Angeles, CA. Since American Funds EuroPacific Growth A made its debut in April of 1984, AEPGX has garnered more than $28.39 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 in particular has delivered a 5-year annualized total return of 8.83%, and it sits in the middle 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 9.28%, 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. Compared to the category average of 8.85%, the standard deviation of AEPGX over the past three years is 10.77%. The standard deviation of the fund over the past 5 years is 10.51% compared to the category average of 11.95%. 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. AEPGX lost 51.29% in the most recent bear market and outperformed its peer group by 7.09%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 0.85, so investors should note that it is hypothetically less volatile than the market at large. 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. With a negative alpha of -3.84, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, AEPGX is a load fund. It has an expense ratio of 0.83% compared to the category average of 1.29%. Looking at the fund from a cost perspective, AEPGX 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.

Bottom Line

Overall, American Funds EuroPacific Growth 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.

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