Is American Funds EuroPacific Growth R6 (RERGX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
·3-min read

There are plenty of choices in the Non US - Equity category, but where should you start your research? Well, one fund that you should consider investigating is American Funds EuroPacific Growth R6 (RERGX). RERGX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify RERGX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

American Funds is based in Los Angeles, CA, and is the manager of RERGX. The American Funds EuroPacific Growth R6 made its debut in May of 2009 and RERGX has managed to accumulate roughly $76.87 billion in assets, as of 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 in particular has delivered a 5-year annualized total return of 13.52%, 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 8%, 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. Over the past three years, RERGX's standard deviation comes in at 19.01%, compared to the category average of 15.13%. The standard deviation of the fund over the past 5 years is 15.82% compared to the category average of 12.66%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.93, which means it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. RERGX has generated a negative alpha over the past five years of -1.08, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, RERGX is a no load fund. It has an expense ratio of 0.46% compared to the category average of 1.19%. RERGX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $250; each subsequent investment needs to be at least $50.

Bottom Line

Overall, American Funds EuroPacific Growth R6 ( RERGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, American Funds EuroPacific Growth R6 ( RERGX ) looks like a somewhat average choice for investors right now.

This could just be the start of your research on RERGXin the Non US - Equity 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


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