American Funds Fundamental Investors Fund (“ANCFX”) is an actively managed large-cap blended fund that combines value stocks and growth stocks in one portfolio. The fund’s objective is to provide a combination of capital growth and income. These Class A shares have an expense ratio of 0.6%.

The Company

American Funds is a subsidiary of Capital Group, a privately owned Los Angeles-based asset manager founded in 1931. With more than $1.39 trillion in assets under management (AUM) and 34 traditional mutual funds in its family of funds, as of Dec. 31, 2015, Capital Group is America’s seventh-largest asset management firm. The firm provides asset management and financial advisory services to wealthy individuals, corporate pension plans, sovereign funds, government retirement plans, foundations and individual investors.

Investment Philosophy

Capital Group has an overall investment philosophy that stresses looking for value-based opportunities and long-term returns while preserving capital. The firm does not focus on short-term returns or worry about temporary overperformance or underperformance against benchmark indexes.

Capital Group has a corporate structure for investing that combines teamwork with individuality. Managers and analysts connected to each portfolio meet as a team to discuss all ideas, viewpoints and possible investments. Each team member is given a portion of a portfolio’s net assets to invest according to his or her own decisions. Capital Group believes that this combination of teamwork and individual commitment develops stronger portfolios.

Fund Management

The American Funds Fundamental Investors has seven portfolio managers. The portfolio managers have an average tenure with Capital Group of 22 years and an average of 11.4 years working with the portfolio. This level of longevity is a Capital Group hallmark. Managers’ and analysts’ performance bonuses are primarily based on their individual four- and eight-year returns.

The Portfolio

The fund has $77.9 billion in AUM, as of September, 2016. These assets are invested in the equity securities of more than 160 companies, 90% of which are large-caps with an average market capitalization of $79.3 billion. The top 10 holdings comprise 27.1% of net assets. The top three investments are, Inc. (NASDAQ: AMZN) at 4.2% of net assets, Microsoft Corporation (NASDAQ: MSFT) at 3.9% of net assets, and Philip Morris International Inc. (NYSE: PM) at 3.4% of net assets.

U.S. equities comprise 86.3% of the portfolio and non-U.S. equities comprise 9%, with the remainder in cash. The two main investment sectors, consumer discretionary and information technology, contain 36.8% of net assets. The fund has a beta of 1.01 and a turnover ratio of 29%. The fund has 13 different classes of shares. Some of these classes, offered through fee-based financial advisors and corporate retirement plans, do not charge front-end sales loads. Retirement plan investors should read their plan's prospectus as this is a good fund for long-term retirement investing.

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