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In an Industry of Sprinters, American Funds Demonstrates Its Endurance

The firm is evolving in the face of industry trends--and continued redemptions from its funds--but certain hallmarks remain intact.

Morningstar recently issued a new Stewardship Grade for American Funds. The firm's overall grade--which considers corporate culture, fund board quality, fund manager incentives, fees, and regulatory history--is an A. What follows is Morningstar's analysis of the firm's corporate culture. This text, as well as analytical text on the other four Stewardship Grade criteria, is available to subscribers of Morningstar's software for advisors and institutions: Morningstar Principia®, Morningstar Advisor Workstation(SM), Morningstar Office(SM), and Morningstar Direct(SM).

The deep roots of American Funds' more than 80 years of investing success are many and intertwined, though for the most part, they can be traced to a few sources: the firm's trademark multimanager system; a stable and long-tenured team of investment professionals; and an incentive system that allows those professionals to take the long-term view in an increasingly myopic market. Combined, American and its parent company, Capital Group, have leveraged those characteristics to impressive results, particularly on the equity side of their business, where the vast majority of American's assets under management reside.