American Funds Washington Mutual AAWSHX

Morningstar Rating

Fund Research and Analysis

by Andrew Gogerty

American Funds Washington Mutual maintains its long-term appeal.

This large-value Analyst Pick has trailed its peers thus far in 2009, but we're far from throwing in the towel. Thus fund's current underweighting in financials (7% of assets compared with 19% for its typical peer) has weighed on returns, as has relative stock selection. Read more

Kudos

Experienced management and a deep bench of research analysts.

High dividend yield.

Low costs.

Management is usually a large shareholder of the fund's holdings, giving it significant influence over corporate policy. Read more

Risks

May lag when growth stocks are in favor.

American has not articulated a plan for closing this and other huge funds, something we think shareholders deserve. Read more

Strategy

This value fund invests by following this prudent investor rule: Buy the stocks of firms that have paid dividends in nine of the past 10 years. By mandate, the fund also can't own the stocks of tobacco and alcohol companies. Read more

Management

This fund's team members all have long tenures. James Dunton, the longest-serving member, has been on board for 30 years and boasts more than 40 years of investment experience. In addition, the team is supported by a very deep bench of experienced investment analysts. Read more

Inside Scoop

Although this fund's defense is solid, good stock-picking has ensured that its offense isn't too shabby, either. The fund emphasizes dividend-paying stocks and never invests in alcohol or tobacco stocks. Read more

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