On the lookout for a Allocation Balanced fund? Starting with American Funds Balanced R3 (RLBCX) is one possibility. RLBCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
RLBCX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
RLBCX is a part of the American Funds family of funds, a company based out of Los Angeles, CA. American Funds Balanced R3 made its debut in July of 1975, and since then, RLBCX has accumulated about $2.45 billion in assets, per the most up-to-date date available. 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 9.39%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 12%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. Compared to the category average of 13.75%, the standard deviation of RLBCX over the past three years is 10.89%. The standard deviation of the fund over the past 5 years is 10.75% compared to the category average of 13.27%. This makes the fund less volatile than its peers over the past half-decade.
The fund has a 5-year beta of 0.64, so investors should note that 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 negative alpha over the past 5 years of -2.1, which shows that managers in this portfolio find it difficult to pick 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, RLBCX is a no load fund. It has an expense ratio of 0.89% compared to the category average of 0.94%. RLBCX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $250 and that each subsequent investment needs to be at $50.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, American Funds Balanced R3 ( RLBCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on RLBCX in the Allocation Balanced category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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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This article originally published on Zacks Investment Research (zacks.com).