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What Makes American Funds' Equity Lineup Golden

A strong, results-oriented investing culture serves customers well.

Alec Lucas: American Funds’ multimanager approach has long served its equity investors well--and should continue to do so, thanks to parent Capital Group’s strong, results-oriented investing culture. Indeed, 13 of the 14 American Funds equity offerings with a forward-looking Morningstar Analyst Rating are medalists, including 10 Gold-rated funds. 

To maximize their chances of success, investors should understand the options within the American Funds equity lineup. While the 14-fund lineup is nearly comprehensive in scope, it isn’t exhaustive. There is no foreign-large value Morningstar Category offering, for example. Meaningful exposure to small-cap stocks can also be harder to come by, but it isn’t absent: Smallcap World is a growth-leaning, global small-cap and mid-cap stock fund. There are also two multi-cap offerings: AMCAP, which has a domestic focus, and New Economy, which has a nearly global mandate. Both tend to hold ample cash stakes to help moderate the market’s ups and downs and pick up bargains amid volatility. AMCAP has a capital appreciation mandate, but its sector exposures tend to be more diversified than New Economy, which looks for innovative companies and often invests heavily in tech and biotech stocks, including companies domiciled in emerging markets. Unlike its multi-cap siblings, Growth Fund of America is a large- and mega-cap-oriented fund. It can invest up to 25% of its assets overseas and has latitude to own turnaround plays in addition to more-conventional growth stocks.