The Wrong Side of History
The American Funds saga.
It's Not the Numbers, Stupid!
Yesterday's column showed the cultural resemblances between the mutual fund industry's sales leader, Vanguard, and its sales laggard, American Funds. The two organizations are similarly conservative, releasing mainstream, risk-averse funds that behave predictably. Both families operate strategically, with among the longest time horizons in the business. Neither Vanguard nor American Funds will rush a fund to marketplace so as to capitalize on a hot asset class or on a currently popular investment trend. Finally, American Funds, too, runs funds at a relatively low cost, albeit nowhere near at Vanguard levels.
What the column didn't reveal were the performance results. In the table below are the average annualized gains for the U.S. stock funds offered by American Funds, compared with the results for Vanguard Total Stock Market Index (oldest share classes only).