Why We Highly Rate American Funds Investment Company of America

Key Morningstar Metrics for American Funds Investment Company of America

• Morningstar Medalist Rating: Silver
• Process Pillar: Above Average
• People Pillar: Above Average
• Parent Pillar: High

Increased confidence in the more flexible approach of American Funds Investment Company of America RICGX merits a Process Pillar rating upgrade to Above Average from Average.

This fund is supported by a capable management team, with robust analytical support. Soon, eight managers will helm this fund. Firm veterans Martin Romo and Grant Cambridge oversee allocating capital to the individual managers. While experienced manager James Terrile stepped off the fund and retired from the firm June 1, 2025, veterans James Lovelace, Martin Jacobs, and Chris Buchbinder remain. Additionally, newer managers Jessica Spaly and Aline Avzaradel have more than two decades of industry experience each. Last year, the firm named up-and-comer Greg Miliotes to the management team. He has 18 years of experience at the firm. The managers are supported by a deep research team of more than 100 analysts.

After a long stint of underperformance, Romo and Cambridge tweaked the process in 2020, steering it back to its core mandate, focusing on the growth of capital and income. The fund seeks a healthy mix of dividend-payers and growth names, but it has had trouble in the past striking the right balance. To increase the managers’ flexibility, the co-heads decreased the fund’s preyield target and expanded its eligibility list. They also added Spaly and Avzaradel to keep a healthy mix of investment styles across the team. Spaly, who used to cover top five holding Amazon.com, likes firms with better-than-average growth prospects and durable business models, while Avzaradel favors dividend growers.

So far, this increased flexibility has benefited investors. The fund’s move away from a higher income target came at a poor time as 2022 rewarded high-dividend-yielding stocks relative to growth stocks, yet it still held up better than the S&P 500, showing it didn’t stray too far from its roots. As growth bounced back in 2023 and 2024, the fund outperformed the index, landing in the top quintile of its Morningstar Category in both years. It had strong picks in several sectors like Meta Platforms META, Broadcom AVGO, and GE Aerospace GE. What’s more, as valuation has been more important in 2025’s first half, the fund still held up better than the index and the typical peer.

American Funds Investment Company of America: Performance Highlights

From its longest-tenured managers’ 1992 start through June 2025, the US fund’s R6 shares’ risk-adjusted results have beaten the S&P 500. Yet, it has struggled over the past 10 and 15 years, with its R6 shares lagging the index by 0.4 and 0.7 annualized percentage points, respectively.

The fund’s income orientation had been a headwind and suffered from poor stock selection. In 2021, for example, the fund hurt itself by underweighting index titan Apple AAPL; some managers worried that Apple’s profitability was poised to decline. Avoiding highflyers like Tesla TSLA and Nvidia NVDA also weighed on returns as the fund’s 25% gain lagged the S&P 500 by 3.3 percentage points.

The fund’s leadership changed hands in 2020, and the leaders sought to steer it back to its growth of capital and income mandate by opening up the eligibility list and lowering the yield requirement. Results have been more impressive since then, as the fund’s returns outperformed the index and large-blend category average.

The fund has typically offered protection in down markets, and that hasn’t changed since the process enhancement. In 2022, the fund’s 15.5% loss was milder than the S&P’s 18.1% loss, and it landed in the category’s top third, with solid technology picks such as semiconductor giant Broadcom. In the first half of 2025, the fund’s 10.9% cumulative loss handily bested the index and category norm.

The fund outperformed the index in 2023 and 2024 and landed in the top quintile of the category in both years. It had strong picks across several sectors with standouts such as Meta, Broadcom, and GE Aerospace.