American Funds New World Fund

Scorecard
4 / 5 Stars
Lipper
5 4 3 4 3
Zacks Investment Research
3 (Hold)
Standard & Poor's
5 / 5 Stars
TheStreet.com
D- (Sell)

U.S. News evaluated 202 Diversified Emerging Mkts Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 9.24 percent over the past year, 5.29 percent over the past three years, 18.05 percent over the past five years, and 10.56 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 0.3%
1 Year 9.2%
3 Years (Annualized) 5.3%
5 Years (Annualized) 18.0%
10 Years (Annualized) 10.6%

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Summary

American Funds New World Fund is a diversified international fund that has managed to stay less volatile than most other emerging-market rivals.

As of March 05, 2014, the fund has assets totaling $22.37 billion. Its portfolio consists primarily of equities, with smaller holdings of government and corporate bonds and cash.

The fund aims to smooth volatility by investing in stocks of multinational companies from developed countries alongside developing-nation government and corporate bonds. Lately, management has upped the fund's equity stake to around 80 percent of total assets. More than half of the fund's stock weighting is invested in the emerging economies as of the end of 2010. The fund has returned 9.24 percent over the past year and 5.29 percent over the past three years.

The fund is more conservative than its peers because of its investments in multinational companies in the developed world that have substantial emerging-market businesses. It aims “to provide access to the growth potential of the developing markets but [mitigate] some of the volatility,” says Dale Hanks, vice president of Capital Research and Management. The fund has returned 18.05 percent over the past five years and 10.56 percent over the past decade.

Investment Strategy

The fund will generally keep at least 35 percent of its assets in developing countries and may invest up to 25 percent of its assets in debt securities, which may be below investment grade.

Role in Portfolio

Morningstar calls this fund a core holding in a portfolio, saying, “Due to its low-risk profile and eclectic portfolio, this emerging-markets fund could serve as a core holding for the very-long-term investor.”

Management

The fund is run by a multiple portfolio counselor team advised by Capital Research and Management Company. Each counselor independently manages a specific segment of the portfolio. All five counselors have been managing the fund since its 1999 inception.

Fees

American Funds New World Fund has an expense ratio of 0.76 percent.

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Risk

The fund carries risk because of its large investments in developing countries, which often have less-developed legal and accounting systems and more-unstable governments and economies, according to the prospectus. However, the fund reduces this risk by diversifying its investments, holding stocks in both developed and developing countries, as well as government and corporate bonds.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 5 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 4 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-03-12

The fund appears on the 2011 Money 70 list of recommended mutual and exchange-traded funds.

Money 70

In the annual Lipper/Barron’s Fund Families Survey for 2010, American Funds ranks 49 out of 57 fund families surveyed.

Lipper 2011-04-11

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “This fund is supported by a fund-holder-focused corporate culture and a fund board led by an independent chairman. Its fees also are reasonable. Overall, it’s a strong steward of capital.”

Morningstar 2011-02-02

In the annual Lipper/Barron’s Fund Families Survey for 2010, American Funds ranks 49 out of 57 fund families surveyed.

Lipper 2011-04-11

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “This fund is supported by a fund-holder-focused corporate culture and a fund board led by an independent chairman. Its fees also are reasonable. Overall, it’s a strong steward of capital.”

Morningstar 2011-02-02