As you can see, an investment manager with a proven track record of outpacing the market can produce significantly greater wealth than an index investment.
A comparison of the lifetime results of the first index fund to the results of five American Funds over that same period illustrates our advantage. Those funds are AMCAP Fund, American Mutual Fund, The Growth Fund of America, The Investment Company of America and Washington Mutual Investors Fund. The comparison is especially apt as that index fund was designed to track the S&P 500, which is also the benchmark for the five American Funds which seek to pursue investment objectives such as growth, income or preservation of capital. Watch and see how the American Funds fared since the index fund’s inception — from August 31, 1976, through December 31, 2016:
Figures shown are past results for Class A shares for American Funds (Investor shares for Vanguard 500 Index Fund) 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. Unless otherwise indicated, American Funds returns are shown at maximum offering price (MOP) and reflect deduction of the 5.75% maximum sales charge at the beginning of the period shown. Thus, the net amount invested was $9,425 ($1,885/per fund in the American Funds Blend scenario.). The maximum initial sales charge
was 8.50% prior to July 1, 1988. All distributions were reinvested. The Vanguard fund has no up-front sales charge and is available in another share class with a lower expense ratio. This share class was not available for investment at the inception of the fund. The American Funds are now also available in less expensive share classes that do not feature a sales charge. Current information and month-end results for the Vanguard fund can be found at vanguard.com. For current information and month-end results for the American Funds, visit americanfunds.com.
*Figures shown are for the period August 31, 1976, the inception date of the first index fund, through March 31, 2017. Standard deviation is a measure of how returns over time have varied from the mean and is one of the most common measures of absolute volatility. A lower number signifies lower volatility.
†The Vanguard 500 Index Fund has no up-front sales charge.
Actively managed funds typically have higher turnover than index funds, which may have tax implications. Portfolio turnover is a measure of how frequently assets within a fund are bought and sold within a 12-month period. The lower the percentage, the less buying and selling took place.
Expense ratios are as of each fund's prospectus.
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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 mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
American Funds Distributors, Inc., member FINRA.