who's buying American Funds?

Recently, there were reports that the top mutual fund companies (in
terms of assets in non-money market mutual funds) are now 1) Vanguard
2) American Funds 3) Fidelity.

How did American Funds become #2?! I looked over their fund selection,
and they don't look that compelling. They don't have any no-load
funds... their Class A's have a 5.75% sales charge, ouch! They don't
have any index funds, and no sector funds. Who's buying American Funds?
The only reasoning I can come up with is if they're in a lot of 401K
plans where people don't have another choice.

Re: who's buying American Funds?

Bucky wrote:
> Recently, there were reports that the top mutual fund companies (in
> terms of assets in non-money market mutual funds) are now 1) Vanguard
> 2) American Funds 3) Fidelity.
>
> How did American Funds become #2?! I looked over their fund
selection,
> and they don't look that compelling. They don't have any no-load
> funds... their Class A's have a 5.75% sales charge, ouch! They don't
> have any index funds, and no sector funds. Who's buying American
Funds?
> The only reasoning I can come up with is if they're in a lot of 401K
> plans where people don't have another choice.


We have a 401K plan where American fund is one of the many choices.
People buy into them because they don't know any better. That should
tell you something about how well the Bush plan for SS works. Not only
don't people fully invest in the available 401K and IRA plans, but they
make stupid choices.

Re: who's buying American Funds?

"Bucky" <> wrote

> How did American Funds become #2?! I looked over their fund selection,
> and they don't look that compelling. They don't have any no-load
> funds... their Class A's have a 5.75% sales charge, ouch! They don't
> have any index funds, and no sector funds. Who's buying American Funds?
> The only reasoning I can come up with is if they're in a lot of 401K
> plans where people don't have another choice.

Your answer is above. 5.75% sales charge and an army of salesmen pushing
these funds. In addition, American Funds has been sued for providing illegal
kick backs to the most aggressive and loyal sales firms/people that sell
their funds. A Google search will confirm this.

The fact is, though, that American Funds do offer good products and low
expenses. If you are a really long term investor the money you save in
annual expenses should pay you back for the sales charge. Personally, I
don't own any of them and because I'm not really a buy it and forget it
investor they don't suit me.

Winners: 5 year rank in category
AF Amcap, top 2%.
AF American Mutual, top 20%
AF Capital Income Builder, top 15%
AF Euro Pacific Growth, top 25%
AF Growth Fund of America, top 6%
AF New Perspective, top 30%
AF New Economy, top 25%
AF Washington Mutual, top 35%
AF American Balanced, top 3%

What is it besides the sales charge that makes these funds not all that
compelling?

All big fund companies usually have a couple of dogs.

Dogs:
AF Fundamental Investors, bottom 30%
AF Investment Co. of America, bottom 40%