Investing with American Funds

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1. American Funds may be unfamiliar to you. They don’t advertise in the conventional way, and this is by design. American Funds is also out of Los Angeles as opposed to New York which gives it a different flavor and style versus its more high profile rivals. Interestingly, American Funds is the largest mutual fund company in the world, far larger than Oppenheimer, Hartford, Genworth, and other companies that you might see advertised on college football games.

2. I have stated in other articles that I am not a fan of mutual funds generally. This is true, I prefer Exchange Traded Funds, which are much less expensive to own than mutual funds. But mutual funds are the single most popular vehicle for the average investor to get a piece of the market and American Funds does a very good job.

3. Another point. Generally if one is going to invest in mutual funds I advise no load funds. American Funds have loads. They are only sold through a broker. One can not call up American Funds and establish a stand alone account. American Funds is committed to the broker model of doing business. They believe that there is real value in having an advisor. For some people I believe this is true.

4. If you are one of those people who prefer to do business with an advisor I would suggest that you go to This is a fantastic resource that will help you understand the costs involved with investing with American Funds, how to go about finding a broker, and how to allocate you portfolio.

5. Though loaded funds, American Funds are able to keep costs fairly low on an ongoing basis. In other words, once you pay the broker his/her commission, the expense ratio, or the amount you will pay for American Funds to manage your money, is quite low relative to other fund companies. As loaded funds go American Funds, I believe, offers the best value for the money.


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