The American Funds family of mutual funds is primarily a fund shop for brokers and long-term investors, but there are a few compelling offerings that offer both short-term and long-term qualities for 2015.
Most of the funds in the American Funds family each have 15 to 20 share classes for brokers and investors to choose from. Therefore there are actually between 40 and 50 funds available. I then eliminated fund categories that I believe will not be top-performers in 2015, such as foreign stock and emerging markets, and also fund types that may only work in a minority of investor portfolios, such as target-date funds and municipal bond funds.
After peeling away several layers of superfluousness, the best funds were enabled to shine through with their outstanding performance records and portfolios strong enough to provide good returns to investors in 2015 but also the challenging environments that are sure to follow.
And with that, in no particular order, I give you the best American Funds for 2015.
Best American Funds for 2015: American Funds Income Fund of America (AMECX)
A primary strength of American Funds is their lineup of balanced funds, and American Funds Income Fund of America (AMECX) is arguably best in this category.
Part of what makes AMECX stand out among American Funds and the remainder of the mutual funds universe is the management’s ability to navigate changing market environments with their asset allocation tactics. The fund’s equity exposure was recently near 70%, whereas the average moderate-allocation fund was roughly 60%. This may increase market risk but it’s also smart portfolio management.
Long-term performance also demonstrates Income Fund of America’s attributes with 1-year, 3-year, 5-year, 10-year, and 15-year returns all in the top 33% or top 25% of moderate-allocation funds.
Living up to what its name suggests, Income Fund of America has an outstanding yield of 2.99%, which will attract investors looking for decent yields in 2015.
AMECX has a front-load of 5.75% but some investors may qualify for load-waived shares. The expense ratio is a low 0.57% and the minimum purchase amount is also low at $250.
Best American Funds for 2015: American Funds AMCAP (AMCPX)
If you are looking for an outstanding growth fund for 2015, American Funds AMCAP (AMCPX) should be on your short list of finalists.
While the American Funds Growth Fund of America has grown bloated and put up mediocre returns in the past several years, the American Funds AMCAP has picked up the growth slack with a well-managed top-performer.
Although AMCPX is still large at nearly $45 billion in assets under management, the management team system at American Funds has proven successful here despite its cumbersome appearance. For 2014, American Funds AMCAP beats 70% of large growth category peers. The ranks also look as good or better in long-term annualized return ranks.
For 2015, AMCPX is poised for a late-phase bull market push with heavy exposure to domestic large- and mid-cap holdings and technology, healthcare and industrials as top sectors.
American Funds AMCAP has a front-load of 5.75% but some investors may qualify for load-waived shares. Like other American Funds, the expense ratio is a low 0.70% and the minimum purchase amount is also low at $250.
Best American Funds for 2015: American Funds Capital Income Builder (CAIBX)
Investors looking for a solid core holding, above-average yields, or both should take a close look at American Funds Capital Income Builder (CAIBX).
The management team for CAIBX looks all around the world to build a diversified portfolio of stocks and bonds that can deliver attractive returns and yields without taking unreasonable amounts of market risk.
The portfolio was recently at around 75% stocks, with the remainder of holdings in bonds and cash. Top holdings include large international firms like Altria Group Inc (MO), Novartis (NVS), and BP PLC (BP).
If returns in 2014 give clues about 2015 performance, the top 5% category rank for year-to-date through December 26 point to a continuation of outperformance. Long-term performance is also well above average for the fund.
For investors looking for more than just solid returns and a diversified core holding, the 2.9% yield is also attractive.
American Funds Capital Income Builder has a front-load of 5.75% but some investors may qualify for load-waived shares. The expense ratio is a low 0.61% and the minimum purchase amount is also low at $250.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.