American Funds Fundamental Investors Fund

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

U.S. News evaluated 492 Large Blend 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 20.35 percent over the past year, 11.48 percent over the past three years, 18.82 percent over the past five years, and 7.98 percent over the past decade.

Trailing Returns Updated 03.31.2014
Year to date 0.1%
1 Year 20.3%
3 Years (Annualized) 11.5%
5 Years (Annualized) 18.8%
10 Years (Annualized) 8.0%

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Summary

It’s hard to match the consistent success of American Funds Fundamental Investors. While it lost big during the downturn, the fund has produced solid returns since its inception in the late 1970s, thanks to some savvy stock picking and a fairly large weighting of international stocks.

As of April 22, 2014, the fund has assets totaling $67.96 billion. Its portfolio consists primarily of investments in large-caps in the United States, but it also has a sizable amount of assets invested overseas.

The fund's stockpickers keep it simple. They generally stick to high-quality names with high growth prospects. Top holdings include names like Suncor Energy, as well as technology giants Oracle, Microsoft, and Cisco. As of the end of March, the fund has fairly large health-care holdings in pharmaceutical companies like Merck and Roche. The fund has returned 20.35 percent over the last year and 11.48 percent over the last three years.

Fairly heavy stakes in international markets increase the fund’s volatility, but the ability to invest abroad gives the company leeway to invest in sizable firms with solid balance sheets it prefers, wherever they’re located. The fund has returned 18.82 percent over the last five years and 7.98 percent over the last decade.

Investment Strategy

American Funds says, “Fundamental Investors seeks long-term growth of capital and income primarily through investments in common stocks.” The managers invest in a blend of value and growth stocks of primarily large-cap companies that they believe could yield substantial dividends.

Role in Portfolio

Morningstar says “The fund’s blue-chip bent and mix of growth and value stocks make it a great core holding.”

Management

All American Funds are overseen by a group of managers. This fund is run by a team of five portfolio managers from the fund’s adviser, Capital Research & Management.

Fees

American Funds Fundamental Investors Fund has an expense ratio of 1.52 percent.

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Risk

The fund gets fairly high risk marks across the board. Its primary risks are a hefty stake in foreign markets (up to 30 percent) and a large stake in energy companies, which typically experience higher volatility than companies in most industries.

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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 2014-04-10

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 1 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-04-10

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 2014-04-10

In the April 2010 edition of Morningstar's Fund Family Reports, John Coumarianos says, "Given that it doesn’t pay as much income as its siblings and that, like them, its portfolio turnover tends to be low (around 30% annually for the past decade), investors should consider it for a core stock holding in a taxable account."

Morningstar 2010-06-02

In the annual Lipper/Barron’s Fund Families Survey for 2009, American Funds ranks 31st out of 61 fund families surveyed.

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “Investors would be hard pressed to find managers and analysts who know their industries better.”

Morningstar 2011-02-01

In the annual Lipper/Barron’s Fund Families Survey for 2009, American Funds ranks 31st out of 61 fund families surveyed.

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “Investors would be hard pressed to find managers and analysts who know their industries better.”

Morningstar 2011-02-01