American Funds SMALLCAP World Fund® Class F-1 SCWFX

A deep and experienced team gives American Funds Smallcap World a significant edge in parsing the massive global small-cap universe.

With more than 6,000 global small-cap companies, this strategy benefits from a large and experienced investment team. Julian Abdey leads this strategy and his subsidiary alongside managers Bradford Freer and Dimitrije Mitrinovic, who oversee their respective subsidiaries. While veteran manager Greg Wendt retired in June 2025, 14 additional managers support the strategy.

The key ingredient here is Capital Group’s vast analyst pool that gives it a leg up. The strategy aims to circumvent its size by splitting its roughly USD 80 billion asset base between 17 managers, who use their own investment styles to independently run sleeves of the overall portfolio. In employing this divide-and-conquer approach, these managers draw on more than 150 analysts, who also collectively run their own sleeves, to pare the 6,000-plus stock MSCI All-Country World Small Cap Index into around 900 holdings. The team also leverages several local country specialists who help add additional context in countries such as China and India.

The approach lets the managers play to their strengths, provided they target firms at the time of initial purchase with market caps between USD 100 million and USD 8 billion (USD 6 billion for non-US firms). They also have the flexibility to let their winners run and can hold selections until their market caps near USD 50 billion. Indeed, the large number of holdings that have grown this big demonstrates the managers’ ability to uncover hidden gems. For example, top-five holding, Canadian dollar store Dollarama had a market cap of around $3 billion when it first appeared in the portfolio in 2011, which now sits at a roughly $35 billion market cap.

The strategy has struggled recently. It has lagged the index in the trailing one-, three-, and five-year periods through September 2025. It has typically been underweight US stocks relative to the index, which hasn’t helped, but it also has been weighed down by picks. In 2025’s first nine months, US picks such as Cava Group and emerging Asia bets such as Guotai Junan International Holdings have weighed it down.

Yet, this deep portfolio has benefited investors over time and given them access to an asset class that has limited passive alternatives. This remains a strong option for risk-tolerant investors looking for global small-cap exposure.

The strategy's divide-and-conquer approach earns an Above Average Process Pillar rating.

In the liquidity-constrained arena of small-cap investing, the fund aims to circumvent its girth by dividing its roughly USD 80 billion asset base between close to 20 managers and three analyst teams. Their independently run portfolios range in size from about USD 1.5 billion to close to USD 4 billion. Those are reasonable levels, given the strategy’s global mandate and its requirement for non-US new purchases to have a market cap below USD 6 billion and for US new purchases below USD 8 billion. The fund strives to have 80% of assets in the market-cap range of the MSCI All Country World Small Index, but that’s not always the case, as managers can hold on to picks until their market caps near USD 50 billion.

Capital Group’s multimanager approach also lets the managers play to their strengths. For example, Roz Hongsaranagon invests in firms with long growth runways, while Dimitrije Mitrinovic looks for companies that could scale well. Managers have considerable leeway; they can invest solely in a small group of their best ideas, own many stocks at lower weights, or hold significant cash levels while waiting for compelling opportunities (though the leaders are trying to reduce cash on the whole). Meanwhile, the combination of separately run sleeves enhances diversification. The managers eschew high portfolio turnover and often buy stocks that may take several years to work out.

The portfolio holds around 900 stocks with roughly 10% of assets in its top 10 holdings. While the managers must stick to companies below USD 6 billion in market cap at initiation, they regularly take advantage of the freedom to hold on to stocks until their market caps near USD 50 billion. As a result, the strategy’s average market cap tends to be well above the MSCI All Country World Small Index’s.

One might expect that larger-cap tilt to give this fund a more moderate risk profile than the benchmark, but it does not. That’s largely because of its sizable emerging-market stake. Since 2009, the strategy has allocated roughly 11% to 25% to emerging markets (including South Korea and Taiwan), versus about 5% to 14% for the index. Developed-market exposure typically leans toward the United States, which has varied from a high of about 60% of assets in late 2002 to a low of about 26% in late 2007. The strategy’s US exposure as of June 2025 clocked in at 45%, about 6 percentage points short of the index’s current level.

The fund often treads heavily in technology, healthcare, and consumer discretionary, though those sectors have come down since 2021. It has 11% to 16% of assets invested in each sector with overweightings relative to the index ranging from 2 to 4 percentage points as of June 2025. The strategy also has roughly 24% allocated to industrials relative to 20% for the index.

This strategy's experienced management team and unrivaled resources in the category merit a High People rating.

Despite a few personnel changes, this strategy remains in solid hands. American Funds’ parent Capital Group splits the fund's roughly $80 billion asset base, the global small/mid-stock category’s largest, between equity subsidiaries Capital Research Global Investors, Capital World Investors, and Capital International Investors. (CII was added in July 2018.) Julian Abdey took over as the strategy’s lead principal investment officer, in charge of allocating capital across all the managers’ independently run sleeves, in July 2024 from Gregory Wendt, who retired from the firm in June 2025. Abdey also leads CII’s outfit of Peter Eliot and Samir Parekh. Bradford Freer leads CRGI's team of Aidan O’Connell, Shlok Melwani, Taylor Hinshaw, and Brittain Ezzes. Dimitrije Mitrinovic oversees CWI's group of Brady Enright, Andraz Razen, Leo Hee, Roz Hongsaranagon, Arun Swaminathan, Thatcher Thompson, Peter Gusev, and Piyada Phanaphat. In late 2024, two managers stepped off, and Ezzes was disclosed as a listed manager. The managers each oversee a separate sleeve of the portfolio, with Abdey, Freer, and Mitrinovic ensuring that their investing styles complement one another.

The managers leverage more than 150 analysts to parse the vast global small-cap universe. This includes small-cap generalists who focus solely on this strategy. The firm also has several local country specialists to help the analysts add additional color in certain countries, such as China and India.

Capital Group stands out from the pack as it enhances capabilities around strong core competencies. It earns a High Parent rating.

Since 1931, Capital Group, parent of American Funds, has thoughtfully built out capabilities to become one of the world’s largest asset managers, managing more than USD 3 trillion dollars. Building on the success of its long-term-oriented, multiple-manager system for global equities, the firm has developed robust fixed-income and multi-asset units, each managing more than USD 500 billion. In January 2026, as part of its periodic review of its now five distinct research organizations, Capital Group implemented changes to its equity investment subsidiaries. This exercise resulted in most equity strategies having at least one portfolio manager change, but according to the firm, it better balances each of Capital Group’s three equity groups in terms of investment breadth and helps the firm better align leadership opportunities across the groups. These kinds of shifts have occurred before, with the last coming in 2018.

Capital Group has also turned its attention to some modern opportunities. To address public/private market convergence trends, it launched in April 2025 two semiliquid funds with private market giant KKR. In keeping with its signature portfolio management approach, it splits those funds into multiple sleeves, which are managed independently by distinct managers at each firm. Capital Group plans to deepen this relationship with target-date and model portfolios, as well as public/private equity funds. On the other end of the spectrum, although the firm is firmly dedicated to active management, it has also acknowledged investor preference for passive investing and has thus partnered with indexing stalwarts Vanguard, BlackRock, and Schwab on active/passive models. Capital Group’s proven investment prowess, strong reputation among investors, and scale mean it can be selective with its partnerships.

In addressing another recent trend, since early 2022, the firm has launched more than 25 active exchange-traded funds globally, most of which are distinct, but several are similar to some of its legacy American Funds mutual funds. Unlike some of its peers, though, it has not filed for SEC exemptive relief to offer ETFs as a share class.

That’s a lot of change for such a storied and sizable firm, but Capital Group has a long history of serving investors well.

The strategy has a solid long-term record. Through September 2025, the R6 shares outpaced the MSCI All-Country World Small Cap benchmark over the past 15 and 20 years by 20 and 40 basis points, respectively.

Yet, the strategy has struggled recently and has typically lagged when value stocks do better than their growth counterparts. The strategy lagged the index in the trailing one-, three-, and five-year periods through September. It has typically been underweight US stocks relative to the index, which hasn’t helped, but it also has been weighed down by picks. In 2025’s first nine months, picks in the US, such as Cava Group, and emerging-Asia picks, such as Guotai Junan International, have weighed it down. During value-oriented periods, such as in the early 2000s bear market, in 2016, and in late 2021 through 2022, it also lagged, partly because of its growth tilt and several US picks.

Yet, investors who have held on through these bouts of underperformance have done well. The strategy has an annualized 0.9-percentage-point edge since the index’s mid-1994 inception. Since this strategy’s longest-serving manager’s November 2004 start through September 2025, it outperformed the global small/mid-stock Morningstar Category norm in 98% of rolling five-year returns and outperformed the index 75% of the time.

American Funds SMALLCAP World F1's Prospectus Adjusted Expense Ratio is 1.07% per year. It places it in the middle quintile of the Morningstar US Fund Global Small/Mid Stock Category, where the median fee is 1.11% per year. This cost positioning translates into a Medalist Rating Price Score of 0.43, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.