American Mutual Funds

The next family of funds that we are going to discuss, as part of this ongoing series, is American Mutual Funds.  In this article, 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 2017.

American Funds Family of Funds

American Funds consists of a family of roughly 50 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 one of the  largest mutual fund families in the United States, with over $1.5 trillion in investments and 50 million customer accounts.

American Funds likes to position their mutual funds as globally-focused.  Over $400 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 investors cannot sign up for an account through the web.

Once an account is established, customers can access their financial information using American Fund's website.  American's site does offer a referral service to their network of financial advisors throughout the world.

Fee Structures and Returns

According to Morningstar, the average expense ratio for a mutual fund at American Funds range from Below Average, 0.82% 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 36.57% of its assets are invested in domestic stock funds as of September 2017.

The minimum investment necessary to open an account at American Funds is only $250.  This is quite low compared to other companies these funds.  As was the case with Invesco Mutual Funds, most of the mutual funds offered by American have a front load.  In fact, only 38.36% of the fund's assets are associated with no-load mutual funds.  As of September 2017, the average return on an American mutual fund over the past five years was 7.80%.

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% or more, 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 big.  The smallest of the three funds still has nearly $5.8 billion in assets.  With that brief introduction behind us, below is a list of the top-rated mutual funds from American Funds as of September 2017:

 

American Funds 2010 Trgt Date Retire A (AAETX)

Assets: $2.6 billion
Category: Target Date
Specialty: Large Blend
Top Three Holdings: American Funds Income Fund of America, American Funds Capital Income Fund, and American Funds Intermediate Bonds
Load: None
Minimum Investment: $250
Expense Ratio: 0.41%
5-Year Average Return: 6.79%

American Funds 2020 Trgt Date Retire A (RECTX)

Assets: $11.2 billion
Category: Target Date
Specialty: Large Blend
Top Three Holdings: American Funds Interm Bond Fund of America, American Funds Capital Income Fund, and American Funds Income Fund of America
Load: None
Minimum Investment: $250
Expense Ratio: 0.42%
5-Year Average Return: 8.44%

American Funds 2015 Trgt Date Retire A (REJTX)

Assets: $4.3 billion
Category: Target Date
Specialty: Large Blend
Top Three Holdings: American Funds Income Fund of America, American Funds Capital Income Fund, and American Funds Intermediate Bonds
Load: None
Minimum Investment: $250
Expense Ratio: 0.40%
5-Year Average Return: 7.53%

 


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