American Funds American High Income Trust Fund

Scorecard
2 / 5 Stars
Lipper
3 3 1 5 2
Zacks Investment Research
2 (Buy)
Standard & Poor's
3 / 5 Stars
TheStreet.com
D (Sell)

#67 in High Yield Bond

U.S. News evaluated 179 High Yield Bond 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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Performance

The fund has returned 10.58 percent over the past year, 7.60 percent over the past three years, 12.61 percent over the past five years, and 7.56 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 4.9%
1 Year 10.6%
3 Years (Annualized) 7.6%
5 Years (Annualized) 12.6%
10 Years (Annualized) 7.6%

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Summary

Investing in the high-yield bond market is a fairly risky business, but with risk sometimes can come reward. The managers at the American Funds American High-Income Trust specialize in finding value in high-yield, low-grade bonds.

As of July 03, 2014, the fund has assets totaling $21.13 billion. Its portfolio consists of investments in high-yield, low-quality corporate bonds of companies in the United States and some small holdings of foreign corporate bonds.

The high-yield bond market isn't for the faint of heart. In 2008, the average fund plummeted a little more than 25 percent, and in 2009 the average fund shot back up almost 50 percent. The fund's story isn't any different. Its returns skyrocketed in 2009. Morningstar warns that although the fund has performed well historically "it may be time to trim rather than add to it" after one of the largest junk-bond rallies in recent history. The fund has returned 10.58 percent over the past year and 7.60 percent over the past three years.

The fund’s focus on low-grade bonds makes it inherently riskier than most, but its managers are known for being some of the most conservative in the fund’s category. The fund, like others that invest in the high-yield bond market, suffers during downturns, but it has maintained fairly steady returns over its 20-plus-year history. “We don’t try to generate the highest current yield—in other words, we do take risk into account,” says Dale Hanks, vice president at Capital Research and Management. The fund has returned 12.61 percent over the past five years and 7.56 percent over the past decade.

Investment Strategy

The fund’s objective is income appreciation through investments in high-yield and therefore low-grade bonds that the fund managers believe are attractively priced.

Role in Portfolio

Morningstar assigns the fund a “supporting player” role in a portfolio.

Management

Like others in the American Funds family, this fund is run by a group of “counselors” instead of a single manager. American High-Income Trust is run by a team of five portfolio managers from the fund’s adviser, Capital Research and Management.

Fees

American Funds American High Income Trust Fund has an expense ratio of 0.66 percent.

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Risk

The fund is for investors who can tolerate fairly risky investments in lower-quality bonds that usually are subject to higher price fluctuations and have longer maturation periods than safer types of bond investments.

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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 2 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 2 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 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 4 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

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 49th out of 57 fund families surveyed.

Lipper

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 2011-03-31

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

Lipper

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 2011-03-31