Was It a Lost Decade for American Funds?
American's stock and balanced funds held up.
At Morningstar, we take a long-term approach to investing. When we judge mutual fund performance, for example, we don't worry too much about how funds have done over one or even three years. We're much more concerned with five-year and especially, when available, 10-year performance records. Economic cycles typically take longer than five years, so we like to judge funds on the basis of a full run of ups and downs.
I recently took a look at how American's stock and balanced funds have performed for the past decade, which is already being notoriously dubbed the "lost decade" for stocks by many observers. American itself currently has an informative page on its Web site questioning the current "lost decade" mantra and showing relatively impressive annualized returns for its 15 equity and balanced funds that have 10-year records. Here, we'll go a little deeper into the performance numbers and the drivers behind them.
Was it Really a Lost Decade?
First, the decade is being written off by stock investors because the main domestic benchmark, the S&P 500 Index, lost 9% cumulatively from Jan. 1, 2000, through Dec. 31, 2009. It's important to note, though, that this is mostly a large-cap index and that mid-cap and small-cap stocks did considerably better.
John Coumarianos has a position in the following securities mentioned above: ANWPX. Find out about Morningstar’s editorial policies.