GAIEX
American Funds Growth and Income-F2
Introduction to GAIEX’s Balanced Aggressive Strategy
The American Funds Growth and Income-F2 (GAIEX) is designed to provide investors with a balanced aggressive approach, focusing on long-term capital growth while also delivering current income. This fund strategically invests in a mix of American Funds, predominantly equity funds, across growth, growth and income, equity income, and balanced categories. With an expense ratio of 0.45%, GAIEX offers a cost-effective option for investors seeking a blend of growth and income. The fund’s diversified approach aims to capitalize on market opportunities while managing risk, making it an attractive choice for those looking to balance aggressive growth with income generation.
At A Glance
Executive Summary
GAIEX offers a balanced aggressive strategy with a 1.98% yield and a competitive 0.45% expense ratio, focusing on growth and income.
Balanced aggressive strategy for growth and income. Competitive expense ratio of 0.45%. Diverse sector and asset class allocation.
Negative alpha and Sharpe ratio indicate potential underperformance. Higher downside risk compared to peers. Max drawdown of -5.4% may concern risk-averse investors.
Performance Analysis: Navigating Market Volatility
GAIEX has demonstrated a robust performance over the past year, with a 1-year return of 26.82%, although it trails its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return. The fund’s annualized returns over five years stand at 10.27%, indicating consistent growth. However, the fund’s negative alpha of -10.84% and Sharpe ratio of -1.14 suggest that it has not effectively compensated for its risk compared to the benchmark. Despite these challenges, GAIEX’s beta of 0.72 indicates lower volatility relative to the market, which may appeal to investors seeking a less volatile investment option.
Portfolio Composition: A Diverse Mix of Holdings
GAIEX’s portfolio is composed of a diverse mix of holdings, with significant allocations in large-cap equities and a notable presence in technology, industrials, and healthcare sectors. The top holdings include American Funds Invmt Co of Amer R6 (RICGX) at 20.17% and American Funds Capital World Gr&Inc R6 (RWIGX) at 14.98%. This diversified sector allocation, with technology leading at 23.73%, positions the fund to benefit from growth in key industries. Additionally, the fund’s bond sector allocation includes a substantial 30.59% in corporate bonds, providing a stable income stream to complement its equity investments.
Risk Metrics: Understanding the Fund’s Volatility
GAIEX’s risk metrics reveal a complex picture of its volatility and risk management. The fund’s beta of 0.72 suggests it is less volatile than the broader market, which can be appealing to investors seeking stability. However, the negative alpha of -10.84% and a Sharpe ratio of -1.14 indicate that the fund has struggled to achieve risk-adjusted returns. The max drawdown of -5.4% highlights potential concerns for risk-averse investors, although the quick recovery length of zero months suggests resilience in bouncing back from market downturns. These metrics underscore the importance of understanding the fund’s risk profile when considering it for a portfolio.
Comparative Analysis: How GAIEX Stacks Up Against Peers
When compared to similar funds, GAIEX offers a competitive expense ratio of 0.45%, which is lower than many of its peers such as Sit Balanced (SIBAX) and Franklin Growth Allocation-A (FGTIX). However, its 1-year return of 26.82% is slightly lower than Fidelity Puritan (FPURX) and Sit Balanced (SIBAX), both of which have returns above 28%. Despite this, GAIEX’s yield of 1.98% is higher than several peers, providing a more attractive income component. This comparative analysis highlights GAIEX’s strengths in cost efficiency and income generation, though it may lag slightly in short-term performance.
Sector and Asset Class Allocation: Strategic Diversification
GAIEX’s strategic diversification is evident in its sector and asset class allocation. The fund allocates 56.09% to U.S. equities, with a significant portion in large-cap stocks, which are typically more stable and less volatile. The technology sector, comprising 23.73% of the portfolio, is a key driver of growth, reflecting the fund’s focus on sectors with high growth potential. Additionally, the fund maintains a balanced approach with 18.36% in bonds and 4.27% in cash, providing liquidity and income stability. This diversified allocation strategy is designed to optimize returns while managing risk, appealing to investors seeking a balanced aggressive investment.
Max Drawdown and Recovery: Resilience in Adverse Conditions
The max drawdown of GAIEX, recorded at -5.4%, occurred over a brief period, with a peak date on July 16, 2024, and a valley date on August 5, 2024. Despite this drawdown, the fund demonstrated resilience with an immediate recovery, indicating its ability to withstand adverse market conditions. This resilience is a critical factor for investors concerned about potential losses during market downturns. The fund’s ability to recover quickly from drawdowns suggests effective risk management strategies, making it a viable option for investors who prioritize stability alongside growth and income.
Conclusion: Is GAIEX the Right Fit for Your Portfolio?
GAIEX stands out as a balanced aggressive fund that offers a blend of growth and income, making it suitable for investors seeking a diversified approach to capital appreciation and income generation. Its competitive expense ratio and strategic sector allocation provide a compelling case for inclusion in a diversified portfolio. However, potential investors should consider the fund’s risk metrics, including its negative alpha and Sharpe ratio, which may indicate challenges in achieving risk-adjusted returns. Overall, GAIEX is well-suited for investors who are comfortable with moderate risk and seek a fund that balances growth potential with income stability.
Similar Securities
FGTIX: Franklin Growth Allocation-A | Aggressive Balanced Growth Fund
FGTIX offers aggressive growth with a balanced approach, featuring a 0.85% expense ratio and a 1.27% yield, ideal for long-term investors.
OAAAX: Invesco Active Allocation-A | Balanced Aggressive Growth Fund
OAAAX offers a balanced aggressive strategy with a 0.98% expense ratio, focusing on U.S. equities and tactical allocations for growth and income.
BAAPX: BlackRock 80/20 Target Allocation-A | Aggressive Growth Fund
BAAPX offers aggressive growth with a 0.65% expense ratio, focusing on equity securities for high-risk investors.
AMECX: American Funds Inc Fd of America-A | Balanced Aggressive Income Fund
AMECX offers a balanced aggressive approach with a 0.58% expense ratio, focusing on income and stability. It features a diverse portfolio with a 2.63% yield.
SCGRX: Franklin Multi-Asset Moderate Growth-A | Balanced Aggressive Growth Fund
SCGRX offers a balanced aggressive strategy with a focus on large-cap funds, providing diversified growth potential with a 1.12% expense ratio.
Futher Reading
https://finance.yahoo.com/quote/GAIEX/”>Yahoo: American Funds Growth and Income-F2
https://ftcloud.fasttrack.net/web/chart/GAIEX
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