Behind the American Funds AMCAP Fund’s Performance so Far in 2016

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Performance evaluation of AMCPX

The American Funds AMCAP Fund Class A (AMCPX) comes in second place among the 12 funds in this review for the YTD (year-to-date) period. Although this looks excellent, its performance has actually dipped as the year has progressed. In the past six months, the fund has emerged as the second-worst performer in our group of 12. We have graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF).

Let’s look at what has contributed to this superior performance YTD in 2016.

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Contribution to returns

The information technology sector has contributed most to the fund’s total YTD returns as of October 14. Texas Instruments (TXN) has led the sector. Other major positive contributors include Broadcom (BRCM), Tencent Holdings (TCEHY), Accenture (ACN), and Trimble (TRMB). Although there have been a few detractors, their combined quantum has been relatively low.

Energy stocks have been sizable contributors to the fund as well. EOG Resources (EOG), Concho Resources (CXO), and Canadian Natural Resources (CNQ) have jointly led the sector. This performance justifies fund managers’ decision to increase exposure to energy stocks. Fund managers’ picks from the materials sector have also paid off. Specifically, Albemarle (ALB) has been a boon to the fund.

Although the industrials sector has done quite well due to positive contributions from Union Pacific (UNP) and Nordson (NDSN), a sizable drag from Capita and Sensata Technologies Holding (ST) has weighed on the sector.

The healthcare and consumer staples sectors have been hurtful to the fund’s performance and have been the key reason for its poor showing in the past six months. While Alexion Pharmaceuticals (ALXN) has driven down the healthcare sector, Kroger (KR) has dragged the staples sector into the red.

Investor takeaway

The earlier part of the year was very good for AMCPX. The energy sector has been an outstanding performer. However, some sectors have really hurt the fund in the past six months. Although the fund is the second-best performer for the year, investors in the fund need to be cautious as a rate hike approaches. To be sure, there’s no need to panic just yet, but keeping an eye on portfolio changes in light of an impending rate hike would be wise.

In the next part, we’ll move on to the second fund in our review, the Fidelity Blue Chip Growth Fund (FBGRX).

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