American Funds has been offering mutual funds since 1934. Based in Los Angeles, it is a subsidiary of global asset manager Capital Group. Capital Group is America’s seventh-largest asset management firm with assets under management (AUM) of $1.7 trillion, as of June 2020. It provides wealth management and financial advisory services to high net-worth individuals, nonprofit foundations, governments, corporate pension plans, retirement funds, and individual investors.
American Funds Amcap Fund
The American Funds Amcap Fund (AMCPX) invests in equity securities with the objective of long-term capital appreciation. Portfolio managers primarily invest in blue-chip U.S. companies with large market capitalizations but may invest in companies of any size, as long as they have good growth potential, and they look at foreign equities as well. It’s a rather venerable fund, having been established in 1967.
A team of analysts supports ten portfolio managers. The fund’s managers have an average tenure with Capital Group of 26 years and have worked for the Amcap Fund for an average of 8 years. This level of longevity contributes to the fund’s consistency.
Capital Group portfolio managers do not invest based on a team consensus. Rather, each portfolio manager and analyst working with the fund is assigned a portion of the fund’s $72.3 billion in AUM (as of October 2020) to invest. It is the firm’s thinking that results are improved when each person has a higher, individual level of responsibility to the fund’s performance.
As of October 2020, 87.2% of the fund’s net assets are invested in U.S. equities, 6.4% are invested in non-U.S. equities (primarily Europe and Asia and the Pacific Basin), and 6.4% is held as cash. Large-cap firms make up 78.9% of the portfolio, mid-cap is 20.0%, and the average capitalization size is $85.7 billion. The three largest sectors of investments are information technologies at 21.5% of assets, health care at 22.6% of assets and communication services at 15.1% of assets. Other represented sectors include consumer discretionary, industrials, energy, financials, consumer staples, materials, utilities, and real estate.
The fund owns stock in more than 140 companies. The top 10 holdings account for 25.2% of its net assets. Its three biggest holdings are Netflix (NFLX), Microsoft (MSFT) and Facebook (FB), with Abbott Laboratories (ABT), Alphabet (GOOG) and Amazon.com (AMZN) rounding out the top six. The fund has a turnover ratio of 27%, an expense ratio of 0.69% and a beta of 0.96.
The American Funds Amcap Fund receives a two-star rating from Morningstar. Its one-year return is 13.28%, its five-year average return is 12.14%, and its 10-year return is 12.87%. These figures put it pretty much in line with both the Standard & Poors 500 Index and the Lipper Growth Funds Index; some years it has had slightly greater returns than the indices, and some years it has slightly underperformed them. However, the fund tends to outperform other funds in the multi-cap core funds category, according to Lipper.