One of the magazines I get is Investment News, which is geared toward advisors. Don't rush to try and get a subscription. Lots of inside baseball. No stock tips. Pretty much the equivalent of the cardboard box manufacturers' magazine, but for investment advisors.
One of the Investment News stories that leapt off the cover of a recent issue was "Advisers remain loyal to American Funds through ups and downs."
The gist of the story is: American Funds, as a family, is gaining assets, with $9.3 billion added in the first half of this year.
One thing in American Funds' favor: The funds are staples of many employer-sponsored retirement plans, such as 401(k)'s, so there is a ready supply of investors, particularly as the employment rate stabilizes.
Also in its favor: As with just about every actively managed fund family, stock brokers (who now call themselves "advisors") get commissions when they sell the funds. So if it's a suitability toss-up between, say, a Vanguard index fund with no commission and an actively managed fund that covers basically the same asset class, which one do you think the broker is more likely to sell?
That's not saying American Funds is necessarily the worst thing, but I'd always opt for an indexing strategy rather than active management. But I also don't get commissions to sell funds and stocks. In general, an index or passively managed fund will be less expensive than an active fund. In addition, passive investing eliminates the risk that a manager's picks will be less than stellar.
For some reason, people seem to think particular funds or fund families are "good" investments. I know somebody who actually bought a fund because his father (who has been dead for 30 years) also owned it. We're not talking about an inheritance here. Just sentimentality, or something.
The fund in question is actively managed; consists of mostly large-cap U.S. stock, but with a small number of foreign stocks; and is pretty darn cheap, as active funds go. Even so, it hasn't quite kept pace with the S&P 500 in most years, though it often comes close, and occasionally beats that index.
As I said, it's not the worst thing ever. You have a pretty good way to benchmark performance of large-cap U.S. stocks (it's called the S&P 500), and we already know that these, like every other asset class, move in cycles.
But I have to kind of scratch my head and wonder, "What's the point?" See, you can argue that such-and-such a fund or fund family has a superior record relative to competing funds, or to a benchmark. But again, you are at the mercy of not only asset class performance, but a manager's skill (or luck). There's not any particular reason to think active funds, even from the same family, would be a better choice, across the board, than a simple passive strategy.