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 The next family of funds that we are going to discuss as part of our ongoing series is American Mutual Funds. We'll first give you some background on the company itself, and then briefly discuss American's fee structure and returns. We'll finish up by listing some of the top-rated American mutual funds.
American Funds Family of Funds
American Funds consists of a family of roughly 30 mutual funds offering investors a wide range of options. American Funds is part of the Capital Group Companies, which is one of the nation's oldest mutual fund families. American is currently the third largest mutual fund family in the United States with over $1,000 billion in investments and 40 million customer accounts.
American Funds likes to position their mutual funds as globally focused in that over $300 billion are invested in non-US based companies. Like many of the larger mutual fund families, American offers its customers a full range of investment opportunities including Roth IRAs, 529 plans, and traditional IRAs. American also tries to distinguish themselves by only selling funds through financial advisors. This means you cannot sign up for an account via the web. Their website does offer a referral service to their network of financial advisors throughout the world.
American Fee Structures and Returns
According to Morningstar, the average expense ratio for a mutual fund at American Funds range from below average - 0.96% for domestic stock funds - to average for their municipal and taxable bond funds. Aligned with American Fund's claim that it offers global options to investors is the fact that only 41% of its assets are invested in domestic stock funds as of August 2008.
The minimum investment necessary to open an account at American Funds is only $250 - quite low compared to other companies offering mutual funds. As was the case with AIM Mutual Funds, most of the mutual funds offered by American are load funds. In fact, only 16.2% of the funds assets are associated with no-load mutual funds. As of August 2008, the average return on an American mutual fund over the past five years is 9.33%.
Top Rated American Mutual Funds
When we took a look at the top rated American mutual funds, we couldn't help but notice a couple of consistencies. The first is that all funds have a front-load of 5.75% - one of the highest loads of any company reviewed to date. This should not be surprising given the fact American only works through financial advisors.
The second thing we noticed was that all of these funds are huge - the smallest of the three still having nearly $50 billion in assets. Finally, we couldn't help seeing that only two of three mutual funds beat the S&P 500 over the last five years. That being said, here is the list of top rated mutual funds from American Funds as of August 2008:
- American Funds Fundamental Invs A (ANCFX) - with a little over $50 billion in assets, this large blend mutual fund invests heavily in the industrial materials and energy sectors. Top holdings include Suncor Energy, Inc, Roche Holding Ltd, and Oracle Corporation. The expense ratio for this fund is 0.57% and the minimum investment is just $250. The fund carries a front-load of 5.75% and the average return over the last five years is 9.89%. (August 2008)
- American Funds Capital World (CWGIX) - with a little over $100 billion in assets, this world stock mutual fund invests primarily in large cap growth companies. Top holdings include E.ON (Germany), Bayer (Germany) and Banco Santander (Spain). The expense ratio for the fund is 0.69% and the minimum investment is $250. The average return over the last five years is 12.01%. (August 2008)
- American Funds EuroPacific (AEPGX) - another giant even by mutual fund standards, assets under control are in excess of $104 billion. In the top three holdings, you'll find Roche Holding Ltd (Switzerland), Bayer (Germany), and Gazprom OAO (EDR) (Great Britain). The expense ratio of this fund is 0.74% and the minimum investment of $250 applies here. Finally, the average return over the last five years is 12.13%. (August 2008)
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