Any investors hoping to find an Allocation Balanced fund could think about starting with American Funds Balanced R3 (RLBCX). RLBCX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
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.
History of Fund/Manager
American Funds is based in Los Angeles, CA, and is the manager of RLBCX. American Funds Balanced R3 debuted in July of 1975. Since then, RLBCX has accumulated assets of about $2.91 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 10.5%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 11.34%, which places it in the middle 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. RLBCX's standard deviation over the past three years is 10.77% compared to the category average of 14.87%. Over the past 5 years, the standard deviation of the fund is 8.77% compared to the category average of 12.32%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 0.57, 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. With a negative alpha of -0.04, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
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 0.90% compared to the category average of 0.89%. RLBCX is actually more expensive 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.
Bottom Line
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 higher fees, this fund looks like a good potential choice for investors right now.
For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into RLBCX too 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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