Foreign/Global and Growth categories were the top gainers for American Funds in the first quarter of 2015. However, none of the fund from American Funds, part of Capital Group, could boast robust Q1 return. This fund family which is among the largest mutual fund families in the US based on assets under management, had a maximum gain of 6% in Q1. However, American Funds maintains that its conservative approach focuses on diversified long-term investing.

Even the broader markets had a muted a performance in first quarter. Looking at the indices, the Dow snapped a three-quarter winning streak. However, the S&P 500 gained 0.4% and extended its quarterly winning streak to nine quarters. The Nasdaq advanced 3.5%, the ninth-straight quarter gain and the longest stretch ever.

However for mutual funds, certain categories did score decent gains. For example, Japan and Healthcare funds posted Q1 returns of 10.91% and 10.71%. In fact, the first quarter was said to be dominated by international funds. According to Lipper, the average diversified US stock mutual funds returned 2.5% in Q1, while international funds gained 4.5%.The first quarter trend suggests that investors have been pouring cash into the international funds. The uptrend for the international funds thus justifies American Funds mutual funds’ gains in the Foreign category.

Fund Family: American Funds

American Funds, part of Capital Group, has been in business since 1931. With $1 trillion of assets under management, it is among the largest investment managers in the US. However, the fund family mostly offers funds through financial advisors. According to American Funds, “Investors who draw on the knowledge and experience of a financial advisor can achieve better results over time”.

The fund family’s decisions are on a long-term perspective. American Funds states “We base our decisions on a long-term perspective because we believe it is the best way to achieve superior long-term investment results”. Also, the Capital Group associates invest significantly in its investment offerings.

As for fund management, each of the funds is divided into portions. In fact, most of the funds from this family have 15 to 20 share classes. The fund family strives to offer a wide range of “investment objectives, levels of volatility and asset types”. Investment professionals having diverse backgrounds, ages and approaches manage these funds. They believe an extensive global research effort is the backbone of their system.

Keep reading our Mutual Fund Commentary section, where we are reporting on performances and best picks from fund families and varied categories.

Quarterly Outlook

US: According to American Funds, investors need to temper expectations after a robust five-year rally. However, investment scenario continues to be favorable on the back of improving labor reports, accelerating growth and benign inflation. The long Bull Run and stocks’ apparent fair valuation are the headwinds. Policy misstep by the US Federal Reserve may also hamper growth.

International: Europe, China and Japan may face muted growth potentials. However, Japan’s Nikkei has surged to a 15-year high and these other international markets have not failed to impress so far. The weakening US dollar may turn out to be a blessing, as along with lower crude prices “for attractively valued export-oriented businesses” may enjoy earnings tailwind. Meanwhile, industrial production and other leading indicators are also gaining momentum in Europe.

Top 15 Performers

Below we present a table with the top 15 American Funds mutual funds with the best returns of Q1 2015:


 
The best returns for Q1 from American Funds mutual funds failed to beat the best returns from popular fund families like Fidelity, Vanguard and Wells Fargo.

The top three gainers had muted returns and managed to provide somewhat better returns than the broader category. American Funds EuroPacific Gr R5 (RERFX - MF report), American Funds SMALLCAP World R6 (RLLGX - MF report) and American Funds New Perspective A (ANWPX - MF report) returned nearly 6%, 5.5% and 4.7%. While American Funds SMALLCAP World R6 carries a Zacks Mutual Fund Rank #3 (Hold), both American Funds EuroPacific Gr R5 and American Funds New Perspective A hold a Zacks Mutual Fund Rank #2 (Buy). Also carrying a Buy-rating, American Funds New Economy A (ANEFX - MF report) posted a total return of 3.6% in Q1.

Apart from Global/Foreign category, Growth funds featured among the top gainers for American Funds. Among them, American Funds Growth Port R6 (RGWGX - MF report) had the best gains - 3.6%. American Funds Growth Port A (GWPAX - MF report), American Funds Gr Fnd of Amer A (AGTHX - MF report) and American Funds AMCAP A (AMCPX - MF report), were the other mutual funds from Growth categories that are featured in the top 15 list. However, American Funds AMCAP A and American Funds Gr Fnd of Amer A carry unfavorable Zacks Mutual Fund Rank #4 (Sell) and Zacks Mutual Fund Rank #5 (Strong Sell).