American Funds is a division of The Capital Group Companies, Inc. Capital Group is a global asset management firm based in Los Angeles, California. It has been in the mutual fund industry since 1934 and is the seventh-largest mutual fund company in the United States, with assets under management (AUM) of $1.3 trillion as of January 2016.
Consistency of returns over longer periods of time is the greatest predictor of a fund’s future potential. Capital Group prides itself on providing consistent long-term results to the shareholders of its funds. The majority of American Funds’ portfolio managers have been with the firm for two decades or longer.
The American Funds mutual fund family contains four very good growth funds with steady returns and excellent longevity of fund managers. All returns are based on the net asset value (NAV) of a fund’s Class A shares and on the time period ending Dec. 31, 2015.
The New Economy Fund
The New Economy Fund’s objective is long-term capital appreciation with income as a secondary consideration. Fund managers seek large-cap companies with high growth potential. The fund’s focus is on companies that can benefit from developing technological innovations or that provide products and services to the creators of new technology. It also invests in companies that use new technologies to provide products to consumers.
The fund primarily invests in U.S. companies but may invest up to 45% of net assets in foreign corporations. The fund’s four managers have been with the fund for an average of 17 years. They are not restricted to investing in common stocks and may utilize convertibles or preferred stock when they see an opportunity. Though it is a growth fund, the fund has a current yield of 0.3%. Investors have enjoyed annualized total returns of 15.89% over three years and 12.74% over five years.
New Perspective Fund
The New Perspective Fund seeks to provide investors with long-term capital appreciation by investing in U.S. and overseas multinational blue-chip firms positioned to take advantage of changing global trade patterns. The fund’s holdings are primarily in the common stock of large-cap U.S. companies, but it may invest up to 100% of net assets overseas.
The fund’s seven portfolio managers have been with the fund for an average of 10 years and with Capital Group for an average of 23 years. They may use common stocks, convertibles, preferred stock and bonds to meet the fund’s objective. The fund has a current yield of 0.8%. It has annualized total returns over three years of 9.12% and 7.71% over five years.
The AMCAP Fund invests primarily in U.S. equities with the objective of long-term capital appreciation. The fund may invest in companies of any size capitalization, but the portfolio favors large caps with histories of steady growth and that may be undervalued in relation to future growth potential. Overseas investment are very limited.
The fund’s four portfolio managers have been with the fund for an average of 10 years and with Capital Group for an average of 25 years. They may use the full range of equity securities to achieve the fund’s objectives. The fund has a small yield of 0.5% and has provided investors with an annualized total return of 15.63% over three years and 12.41% over five years.
The Growth Fund of America
The Growth Fund of America’s focus is to provide growth of capital. The fund invests primarily in the common stock of large-cap firms but may invest in mid caps or small caps as opportunities appear. The bulk of net assets are in domestic securities, but the fund may invest up to 25% of assets internationally.
The fund’s 12 portfolio managers have been with the fund for an average of 10 years and with Capital Group for an average of 26 years. Managers generally invest at least 65% of net assets in common stock and may invest up to 35% of assets in other equity securities, bonds or U.S. government securities. The fund has a current yield of 0.54%. Investors have received annualized total returns of 15.05% over three years and 12.05% over five years.