Energy Exposure Hit the American Funds AMCAP Fund (AMCPX) in 2015

David Ashworth - Author

Dec. 18 2015, Published 12:44 a.m. ET

Performance evaluation

The American Funds AMCAP Fund – Class A (AMCPX) rose 0.8% in November 2015 from October’s reading. In the three-month and six-month periods ended November 30, the fund rose 3.6% and fell 2.6%, respectively. In the one-year period, AMCPX rose 2.8%, and from the end of November until December 15, the fund is down 2.3%. In the YTD (year-to-date) period, the timeframe we’ll be analyzing, the fund is up by 3.0%.

The fund stood fifth among 11 funds in this review for November. However, 2015 has not been good for the fund, as it stood ninth among these funds. Let’s look at what has contributed to the fund’s poor YTD performance.

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Portfolio composition and contribution to returns

Launched in May 1967, AMCPX has the second-longest track record among the 11 funds chosen for this review. The latest complete portfolio available for the fund is as of September 2015. We will use that portfolio as our base and consider valuation changes as of the end of November 2015 for our analysis. All portfolio percentages mentioned from here on refer to their weights according to valuation changes from September to November.

Stocks from the consumer discretionary sector have been the biggest positive contributors in 2015 until November. Netflix, Inc. (NFLX) was the biggest positive contributor by far among all holdings. Although the stock currently forms only 2.2% of the fund’s portfolio, it had constituted an average 15.1% of the portfolio from March–May 2015. This large position during the period helped the consumer discretionary sector post such high returns. Meanwhile, Ralph Lauren Corporation (RL), Williams-Sonoma Inc. (WSM), and Wyndham Worldwide Corporation (WYN) were the main detractors.

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The information technology and healthcare sectors closely followed each other in terms of positive contribution to returns. Class C shares of Alphabet Inc. (GOOGL), Avago Technologies Limited (AVGO), and Class A shares of Accenture plc (ACN) contributed to the information technology sector. Meanwhile, Oracle Corporation (ORCL), and ASML Holding NV (ASML) were among the detractors.

The healthcare sector was led by Hologic Inc. (HOLX), UnitedHealth Group Incorporated (UNH), and Edwards Lifesciences Corp. (EW).

Reasons for poor performance

Year-to-date, investing in the energy sector has detrimental to AMCPX. Fund managers have exited some stocks, but they have persisted with quite a few holdings and even initiated some new positions this year. This demonstrates their conviction in the companies, and the fund may see better days once energy prices bottom out.

Let’s move on to the second fund in this review: the Fidelity Blue Chip Growth Fund (FBGRX).


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