They believed they had a responsibility to provide stability and management continuity to their investors, so they asked themselves a key question: If a portfolio manager left the firm, how could they keep funds going strong?
They pioneered a plan. By dividing funds into sections and giving each of the existing managers a portion to administer, no fund would be too dependent on a single person.
This distinctive way of managing money became The Capital System. By incorporating the highest conviction investment ideas of each manager in a fund, we aim to both increase the diversity of those ideas and reduce the volatility of a fund, which can give investors a smoother ride in bumpy markets.
Source: Capital Group, using data obtained from Morningstar. $10,000 hypothetical investment in five U.S. equity-focused American Funds and the S&P 500, from August 31, 1976, through December 31, 2018. The market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. There may have been periods when the results lagged the index(es).
The U.S. equity-focused American Funds in these analyses include: AMCAP Fund, American Mutual Fund, Fundamental Investors, The Growth Fund of America, The Investment Company of America, The New Economy Fund and Washington Mutual Investors Fund. The investment was rebalanced monthly.
Source: Capital Group calculations based on Capital Group and Morningstar data, as of 12/31/2018. All comparisons are with each fund’s primary or secondary benchmarks as disclosed in the fund’s most recent prospectus. The market index is unmanaged and, therefore, has no expenses. Investors cannot invest directly in an index. There may have been periods when the results lagged the index(es).
The $10,000 hypothetical investment in the line chart is based on daily returns. The S&P 500 values are calculated using the total return index, which includes dividends. The equal-weighted blended average of the seven U.S. equity-focused American Funds includes AMCAP Fund, American Mutual Fund, Fundamental Investors, The Growth Fund of America, The Investment Company of America, The New Economy Fund and Washington Mutual Investors Fund. The investment was rebalanced monthly. Dates shown for market highs and lows are based on the price return of the unmanaged S&P 500 Index, which does not include reinvested dividends. The total percentage loss from high to low shown for the index and American Funds averages are calculated using these dates and based on total returns, which include reinvested dividends. For each of the bear markets shown, the Days to Recovery for the S&P 500 Index and American Funds equal-weighted blended average reflect the number of calendar days (including weekends and holidays) between the stated market low and the next time the value of the investments for each met or surpassed the value set at the pre-downturn market high.