Having trouble finding an Allocation Balanced fund? American Funds Balanced F1 BALFX is a potential starting point. BALFX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of BALFX. The American Funds Balanced F1 made its debut in July of 1975 and BALFX has managed to accumulate roughly $4.58 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 10.85%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.89%, which places it in the top 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. Over the past three years, BALFX's standard deviation comes in at 6.47%, compared to the category average of 8.48%. The fund's standard deviation over the past 5 years is 6.43% compared to the category average of 6.55%. This makes the fund less volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, BALFX lost 36.96% and underperformed comparable funds by 0.78%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.65, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a positive alpha over the past 5 years of 0.5, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, BALFX is a no load fund. It has an expense ratio of 0.66% compared to the category average of 0.90%. From a cost perspective, BALFX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.
Overall, American Funds Balanced F1 has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Funds Balanced F1 looks like a good potential choice for investors right now.
Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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