American Funds generated outstanding returns from some of its key funds during the third quarter as reflected in the Morningstar FundInvestor "Great 38" list. According to the list, out of 38 funds, 11 are under the American Funds' family. The inclusion of some key funds from the company in the Great 38 List is likely to attract more investors with a long-term investment objective to the American Funds' family.
American Funds had about $1.61 trillion of assets under management till Oct 31, 2017. The minimum initial investment of the American Funds mutual funds is $250. As of Oct 31, 2017, the total return of the fund family was around 17.2%, which is more than the category average of 16.5%. Lower expenses, effective fund management and the resilience to survive market volatility have resulted in strong fund returns. Following the strong performance by American Funds, investing in funds from this family might be prudent at this time.
More About American Funds
The second-biggest fund family of the United States increased the dividend payment for its fundamental investors from 15.5 cents per share to 16 cents per share for the quarter ended September.
Additionally, in Morningstar's 2017 "Fantastic 43" List, 13 are from the American Funds' family. Factors like expenses, risk ratings, returns, manager ownership and stewardship were considered while identifying the best-performing mutual funds of 2017. According to Morningstar, American Funds 2025 Target Date Retirement R5 REDTX and American Funds 2030 Target Date Retirement R5 REETX have come up with the best performance in the last five years among the key American Funds' mutual funds.
What Boosted American Fund's Performance?
American Fund invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investments are made in the technology. In the cyclical sectors, it invests in the financial sector. The fund family also gained from investing in defensive sectors like healthcare.
Technology Select Sector SPDR (XLK) jumped 8% in the third quarter and was the best performer among the S&P 500 sectors. Additionally, mutual funds related to this sector registered stable returns. According to Morningstar, the technology mutual fund posted returns of 35% in the last three months.
Additionally, Financial Select Sector SPDR (XLF) and Health Care Select Sector SPDR (XLV) climbed 4.3% and 3.1%, respectively, in the previous quarter. Moreover, the financial and healthcare mutual funds posted positive returns of 10.5% and 20.1%, respectively, in the last three months.
Buy These 5 American Mutual Funds
Founded in 1931, American Funds offers a wide range of financial services all over the world through its offices in different regions including North America and Europe. Here, we have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). These funds generate encouraging returns in the third quarter of 2017 and minimum initial investment is within $5000. Also, these funds have low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
American Funds New Economy R6 RNGGX seeks growth of capital as well as income for the long run. RNGGX invests mainly in common stocks of those companies that have a strong growth potential. RNGGX focuses heavily on non-U.S. companies, which can take advantage of new technologies and innovations.
RNGGX returned 8.6% in the third quarter. Annual expense ratio of 0.47% is lower than the category average of 1.19%.RNGGX has a Zacks Mutual Fund Rank #1.
American Funds Europacific Growth R5 RERFX seeks capital appreciation for the long run. RERFX invests mainly in the common stocks of companies based in Europe and the Pacific Basin region. These stocks are expected to have a strong growth potential. The fund may also invest in companies based in the emerging markets.
RERFX returned 6.8% in the third quarter. Annual expense ratio of 0.54% is lower than the category average of 1.17%.RERFX has a Zacks Mutual Fund Rank #1.
American Funds Growth Portfolio A GWPAX seeks capital appreciation for the long run. GWPAX invests in a wide variety of American Funds, which mainly includes growth funds. The fund invests not only in domestic companies but also in foreign companies, including those that are based in emerging markets.
GWPAX returned 5.3% in the third quarter. Annual expense ratio of 0.81% is lower than the category average of 1.19%.GWPAX has a Zacks Mutual Fund Rank #2.
American High-Income Municipal Bond Fund F-2 AHMFX seeks high income free from federal income tax. AHMFX invests the lion's share of its assets in securities that are free from federal income tax. The fund invests at least half of its portfolio in debt securities that are BBB+ or below or Baa1 or below rated.
AHMFX returned 1.3% in the third quarter. Annual expense ratio of 0.50% is lower than the category average of 0.95%.AHMFX has a Zacks Mutual Fund Rank #1.
American Funds American Balanced F1 BALFX seeks growth of income and capital for the long run and conservation of capital. BALCX maintains a balanced approach by investing in a wide variety of securities, which range from investment-grade debt securities to common stocks.
BALFX returned 3.2% in the third quarter. Annual expense ratio of 0.66% is lower than the category average of 0.96%.BALFX has a Zacks Mutual Fund Rank #2.
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