American Mutual Funds

The next family of funds that we are going to discuss, as part of our ongoing series, is American Mutual Funds.  In this publication, we're going to first provide some background information on American Funds.  Next, we'll briefly discuss American's fee structure and investment returns.  Then we'll finish up with a list of the top-rated American mutual funds in 2011.

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 50 million customer accounts.

American Funds likes to position their mutual funds as globally-focused.  Over $300 billion are invested in non-U.S. based companies.  Like many of the larger mutual fund families, American Funds 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 mutual funds through financial advisors.  This means you cannot sign up for an account through the web.

Once you have established an account, you can access your information using American Fund's website.  American's site 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 39% of its assets are invested in domestic stock funds as of May 2011.

The minimum investment necessary to open an account at American Funds is only $250.  This is 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 21.7% of the fund's assets are associated with no-load mutual funds.  As of May 2011, the average return on an American mutual fund over the past five years was 4.28%.

Top Rated American Mutual Funds

When we took a look at the top rated American Funds mutual funds, we couldn't help but notice several consistent patterns.  The first is that all funds have a front-load of 5.75%, one of the highest loads of any company reviewed.  This should not be surprising, given the fact American Fund only works through a network of financial advisors.

The second pattern we noticed was that all of these funds are huge.  The smallest of the three funds still has nearly $20 billion in assets.  With that brief introduction behind us, below is a list of the top-rated mutual funds from American Funds as of May 2011:

• American Funds New Perspective (ANWPX) - with a little over $47 billion in assets, this large growth mutual fund invests heavily in the technologies and healthcare sectors.  Top holdings include Novo Nordisk, Amazon.com, Inc., and EMC Corporation.  The expense ratio for this fund is 0.79%, 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 5.28%.  (May 2011)
• American Funds EuroPacific (AEPGX) - another giant, even by mutual fund standards, assets under control are in excess of $113 billion.  In the top three holdings, you'll find America Movil, Novo Nordisk, and Novartis AG.  The expense ratio of this fund is 0.85%, and the minimum investment of $250 applies here too.  Finally, the average return over the last five years is 4.54%.  (May 2011)
• American Funds American Mutual A (AMRMX) - with a little over $19 billion in assets, this large value mutual fund invests primarily in large cap domestic companies.  Top holdings include AT&T, Inc., Merck & Co, Inc., and Microsoft Corporation.  The expense ratio for the fund is 0.63%, and the minimum investment is $250.  The average return over the last five years is 3.55%.  (May 2011)

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