American Funds Growth Fund of Amer AAGTHX

Morningstar Rating

Fund Research and Analysis

by John Coumarianos

American Funds Growth Fund of America remains a strong offering.

After nine straight years (from 1998 through 2006) of performance that placed it in the large-growth category's top quartile, this fund has since turned in more middling results. In 2007 and 2008, it landed in the category's middle third. Read more

Kudos

Very experienced managers.

Good tax efficiency.

Solid long-term returns.

Shareholder-oriented advisor. Read more

Risks

Although the fund is fairly tame by growth standards, it still carries more price risk than S&P 500-like offerings.

The fund's giant size makes it difficult for the managers to establish and exit positions as easily as smaller funds can. Read more

Strategy

The fund's portfolio managers invest independently of one another but with a common flexible-growth strategy. The team will invest in a mix of traditional growth stocks, turnaround situations, and cyclical names. Read more

Management

First-rate. Eleven seasoned managers call most of the shots here, and a huge staff of career analysts also runs a part of the fund. Each portfolio counselor manages money without the input of his or her counterparts. American Funds has named new managers to the fund as assets have poured in during the past few years, but it still appears that everyone's running more money than they did a few years ago. Read more

Inside Scoop

This fund's risk-conscious nature may hold it back at times relative to its peers, but it has delivered over time. Its long-term returns are among the group's best, although volatility has been below average. Read more

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