Performance evaluation of the American Funds AMCAP Fund
The American Funds AMCAP Fund Class A (AMCPX) rose 0.4% in 1Q16. This was the highest rise among the 12 funds in this review. In the past year, the fund rose 1.2%, again the highest among its peers.
From the end of December 2015 until April 20, 2016, the fund rose 2.6%. We’ve graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF).
Portfolio composition and contribution to returns
The information technology sector contributed the most to the fund’s total returns in 1Q16. Oracle (ORCL) and Class A shares of Accenture (ACN) led the positive contributors from the sector. There were no major negative contributors.
Though energy formed only 7% of the portfolio, it emerged as the second-largest contributor to the fund’s returns for 1Q16, given the rise in crude oil prices since their lowest point on February 11, 2016. Canadian Natural Resources (CNQ) was by far the biggest positive contributor, followed by Concho Resources (CXO) at a distant second. Similar to the information technology sector, energy saw no major detractors.
The healthcare sector dragged the fund’s total returns for 1Q16, with Alexion Pharmaceuticals (ALXN) primarily responsible for the fall. Stryker (SYK) and UnitedHealth Group (UNH) did their shares to reduce the drag from the sector, though.
Comparison with IVW
AMCPX outperformed IVW in terms of total returns for 1Q16. The active fund’s picks from the information technology, energy, and materials sectors did better than IVW’s, while IVW’s consumer discretionary composition contributed more to its returns than AMCPX’s.
AMCPX had a poor 2015. However, things are looking good so far in 2016. Investors already invested in the fund don’t need to do anything for now. Those just getting started or looking to reallocate can certainly have this fund on their radar.
If crude oil prices remain stable or move up, the fund will be served well. If consumer spending grows at a healthy rate, the fund may be in a bit of trouble due to its low allocation to the sector. It’ll be interesting to see if fund managers stick to their allocations to the sector.
Let’s move on to the second fund in this review: the Fidelity Blue Chip Growth Fund (FBGRX).