How the Cards Fell for 11 Large-Cap Mutual Funds in 2015
Performance evaluation
The American Funds AMCAP Fund – Class A (AMCPX) fell 2.3% in December 2015 from the previous month. In the three-month period ended December 31, the fund rose 5.4% while it fell 3.5% in the six-month periods ended December 31. In the one-year period, the fund is up just 0.7%. Meanwhile, from the end of December to January 20, the fund is down 9.0%.
The fund had a poor 2015. Across the periods under review, it stood ninth among the 11 funds at its best and tenth at its worst. Let’s look at what contributed to the fund’s poor performance in 2015.
Portfolio composition and contribution to returns
The AMCPX has the second longest track record among the 11 funds chosen for this review. It was launched in May 1967. The latest complete portfolio available for the fund is from September 2015. Thus, we will take that portfolio as our base and consider valuation changes as they stand at the end of December 2015 for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from September to December.
Stocks from the consumer discretionary sector have been the biggest positive contributors in 2015. Netflix (NFLX) was the biggest positive contributor by far among all holdings. Though the stock forms only 2.3% of the fund’s portfolio at present, it had formed an average 15.1% of the portfolio from March until May 2015. This large position during the period helped the consumer discretionary sector post such high returns. On the other hand, Ralph Lauren (RL), Williams-Sonoma (WSM), Johnson Controls (JCI), and Wyndham Worldwide (WYN) dragged a little on the sector’s contribution.
Healthcare was the second biggest positive contributor to the AMCPX’s returns in 2015. UnitedHealth Group (UNH), Hologic (HOLX), and Edwards Lifesciences (EW) made positive contributions. Team Health Holdings (TMH) was the largest detractor, but its amount of negative contribution was quite low.
Reasons for poor performance
Energy and industrials picks did not work for the fund in 2015. While all holdings from the energy sectors contributed negatively, industrials were hurt by Union Pacific (UNP). Exposure to energy poses a risk, given that energy prices may remain depressed in 2016 as well with falling demand and no reduction in production.
Let’s move on to the second fund in this review: the Fidelity Blue Chip Growth Fund (FBGRX).
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