American's Target-Date Funds Rated 'Sell'
NEW YORK (TheStreet) -- American Funds managed almost a third of the worst-rated stock funds among those earning new grades from TheStreet Ratings.
Among 24 newly rated portfolios, seven were target-date funds run by American Funds, which manages the $162 billion
Growth Fund of America
(AGTHX) - Get Report
. Of those seven, five were rated "sell" and two were rated "hold."
American Funds jumped into the market for target-date funds three years ago. These funds invest more conservatively over time and have become increasingly popular as people look for ways to simplify their retirement plans.
Of the newly rated funds, three earned "buy" ratings. The
FBR Pegasus Mid-Cap Fund
(FBRMX)
was the top-rated fund of the group with an initial grade of B-plus. This fund buys shares of U.S. companies with market caps between $2 billion and $15 billion. The fund aims to beat the
Russell Midcap Index
and owns stocks such as
T. Rowe Price Group
(TROW) - Get Report
,
Pioneer Natural Resources
(PXD) - Get Report
and
Tiffany
(TIF) - Get Report
.
The B-minus rated
FBR Pegasus Small-Cap Fund
(FBRYX)
follows the same strategy as the mid-cap fund, but invests in companies with market caps of less than $3 billion, including
Sybase
(SY) - Get Report
and
Pool Corp.
(POOL) - Get Report
.
Also in the "buy" range at B-minus was the
Allianz NACM Income and Growth Fund
(AZNAX) - Get Report
, a portfolio that's 32% stocks, 31% convertibles, and 31% junk bonds that generate dividend income. Top equity holding include
Johnson Controls
(JCI) - Get Report
,
McDonald's
(MCD) - Get Report
and
Coca-Cola
(KO) - Get Report
.
Eleven of the newly covered funds were rated "hold."
Research Methodology
TheStreet Ratings
combines fund performance and risk data into a single composite opinion of each fund. Funds must have at least three years of trading history to receive a grade.
A or B grades amount to "buy" recommendations. C equals "hold," and D and E grades are considered "sell" ratings. For more information, check out an
of our ratings.
-- Reported by Kevin Baker in Jupiter, Fla.
Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.
