So Far, It’s Been an Average 2016 for AEPGX

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Performance evaluation of the American Funds EuroPacific Growth Fund

The American Funds EuroPacific Growth Fund Class A (AEPGX) has been an above average performer among the 12 funds chosen for this review, given its returns in 2016 until August’s end.

The past six months have been better for the fund than the year-to-date (or YTD) period. The past year has been worse: It’s placed eighth in its peer group. We’ve graphed its performance against the iShares MSCI ACWI ex U.S. ETF (ACWX) and the iShares MSCI EAFE ETF (EFA). Let’s look at what’s contributed to AEPGX’s average performance YTD.

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Contributions to returns

The stock picks from the information technology sector have been excellent. The sector has contributed the most to the fund’s performance YTD. Japanese game maker Nintendo (NTDOY) has given the biggest boost to the sector. Tencent Holdings (TCEHY), Taiwan Semiconductor Manufacturing (TSM), and ARM Holdings (ARMH) have also helped the sector to post spectacular gains.

Materials stocks are a distant second to technology stocks, led by Fortescue Metals Group and Glencore. Meanwhile, Petrobras (PBR) has primarily been responsible for boosting the energy sector. Adidas (ADDYY), with help from Sony (SNE), has been very beneficial to the consumer discretionary sector’s performance.

The healthcare sector is primarily responsible for the fund’s average showing so far in 2016. Novo Nordisk (NVO) has weighed heavily on the sector, being the main reason for its poor showing. Financials are a distant second, having been driven down by Barclays (BCS) and Prudential (PUK). Some positive contributions from stocks such as HDFC Bank (HDB) and Itaú Unibanco Holding (ITUB), among others, have reduced overall negative contributions a bit.

Investor takeaway

AEPGX has seen better days. Though its technology picks are superb, its healthcare picks have really disappointed. Given the fund’s history, existing investors should likely stick with their investments, but their plans to add positions could be put on hold.

Given its broad base, the fund could be a solid starting point for potential investors. It’ll be interesting to see if the portfolio manager for the healthcare sector can turn things around in the remainder of 2016.

Let’s move on to the Invesco International Growth Fund Class A (AIIEX).

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