American Funds Inc Fund of Amer AAMECX

Morningstar Rating

Fund Research and Analysis

by John Coumarianos

We're not concerned with Analyst Pick American Funds Income Fund of America's recent struggles.

This fund does what its name suggests--it looks for income from both stocks and bonds in roughly equal proportion, and it falls into the moderate-allocation category as a result. Read more

Kudos

Experienced managers at the helm.

The fund's low expense ratio relative to other front-load balanced funds offers a competitive advantage.

The fund has delivered consistently good performance over the long haul with below-average volatility. Read more

Risks

The fund's tendency to keep a good chunk of cash on the sidelines may hold it back during stock-market rallies, and its value orientation may limit its upside when growth stocks rule.

Asset growth at American Funds and potential asset bloat in its high-yield strategy raise concerns.

Credit risk has hurt the fund lately. The managers can overpay for bonds in an effort to achieve higher yields. Read more

Strategy

The fund's managers favor stocks that pay high dividends, which typically leads them to large stakes in financials and utilities stocks and scant exposure to technology shares. On the bond side, the team keeps the fund's interest-rate risk fairly moderate and won't invest more than 20% of total assets in issues rated below investment-grade--that sliver has been a tad below 10% of late. Read more

Management

The fund's nine named portfolio managers are a very seasoned bunch, with an average of more than 18 years with the fund's advisor, Capital Research and Management. Moreover, the firm boasts one of the deepest and most skilled research benches in the fund business. Read more

Inside Scoop

This fund proves that you don't have to go out on a limb to find success. Its conservative mix of stocks and cash hasn't slowed it, but it has typically blunted volatility. Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Picking Positions in Health Care
Watch more