Why It Matters | American Funds

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The Capital Advantage

Why It Matters

Choosing an investment manager with a solid track record can make the difference between financial success and shortfall.

Compare Outcomes of Our Investment Management vs. Passive Management

The indexing debate isn’t just an academic exercise. You have real goals and financial needs. How can you increase the likelihood of success? Choosing an investment manager that has consistently outpaced the broad market is crucial. The right decision can make a big difference in long-term investment outcomes.

For instance, this chart shows the results of a hypothetical $100,000 investment over 20 years in a blend of relevant indexes compared to equity-focused American Funds. For an investor who contributed $500 a month for 20 years, the American Funds would have provided an ending value $40,043 greater than the index blend. That’s 17% more wealth.

The Capital Advantage℠ Can Be the Difference Between Success and Shortfall Equity-Focused American Funds Provided a Significant Advantage for Investors

Data from published sources calculated internally.1

chart-accumulation-Retirement_422x428_01
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Data from published sources calculated internally.2

1 The results for the American Funds are Class A shares. The 401(k) hypothetical $500-a-month investment represents a total of $120,000 for the 20-year period ended December 31, 2015. Data from published sources were calculated internally. For the constituents of the American Funds and index blend, as well as additional details about the data, see Methodology.

2 The results for American Funds Core are Class A shares. Hypothetical results assume reinvestment of all dividends. The average annual return and ending investment values for all three investments take into account withdrawals, and portfolios were rebalanced monthly. For the equity core allocation, hypothetical results are based on averages of rolling
5-year periods of monthly returns from January 1996 to December 2015, and portfolios were rebalanced monthly. Past results are not predictive of results in future periods. The index core represents an equally divided allocation between the S&P 500 Index and MSCI ACWI ex USA. The screened equity core comprises actively managed funds in Morningstar’s large-cap categories that fall within both the least expensive net expense ratio and the highest firm-level manager ownership quartiles. The American Funds core represents a 50% allocation to seven equally weighted U.S.-focused American Funds and a 50% allocation to two equally weighted foreign-focused American Funds. The constituents of each allocation can be found on the Methodology page. These sample portfolios exclude fixed income allocations typical of core portfolio holdings. The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.

 


Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. View fund expense ratios and returns. 

Returns shown at net asset value (NAV) have all distributions reinvested. If a sales charge had been deducted, the results would have been lower.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.