American Funds American Balanced Fund

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

U.S. News evaluated 247 Moderate Allocation 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 17.75 percent over the past year, 11.90 percent over the past three years, 18.14 percent over the past five years, and 6.84 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 0.7%
1 Year 17.7%
3 Years (Annualized) 11.9%
5 Years (Annualized) 18.1%
10 Years (Annualized) 6.8%

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Summary

For the long-term investor that needs a mix of stocks and bonds, American Funds Balanced can do the trick.

As of March 05, 2014, the fund has assets totaling $69.72 billion. Its portfolio consists primarily of stocks, which have historically constituted 50 percent to 75 percent of its holdings.

The fund's stock sleeve was volatile during the recession, but its managers are looking to stay consistent. In terms of holdings, that means a continued preference for blue chips like Microsoft and Coca-Cola. The fund's performance was somewhat tepid in 2009, when riskier stocks soared. The fund's 21 percent return in 2009 landed it in the bottom third of Morninstar's moderate allocation category, but the fund will generally hold up better than its peer when things turn sour in the markets. Although it depends heavily on well-known powerhouse companies, the fund has shown an ability to differentiate among the big names. The fund returned 17.75 percent over the past year and 11.90 percent over the past three years.

Historically, the fund has rewarded investors with steady gains, and 2008 was only the third year since 1975 that it produced a negative return. During this period, the fund placed an emphasis on getting bang for its buck, often buying familiar names that had hit rough patches but looked poised for recovery. Its steady performance and generally conservative investment style applied to both stock and bond holdings have produced respectable long-term returns. The fund has returned 18.14 percent over the last five years and 6.84 percent over the last decade.

Investment Strategy

The fund allows investors to couple riskier equity holdings with the cushion of traditionally steady returns on bonds. "It's not a tactical allocation fund," says Dale Hanks, vice president at Capital Research and Management. "You get a long-term, prudent mix of stocks and bonds." The fund favors a long-term growth approach and tends to avoid shuffling its allocations to cash in on more-ephemeral trends.

Role in Portfolio

Morningstar calls the fund a "core" investment.

Management

Like other members of the American Funds family, American Balanced takes a team-based approach to management and relies on a seasoned group of investment veterans.

Fees

The American Funds American Balanced Fund is an affordable investment. Its expense ratio is 0.41 percent.

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Risk

This fund's bond sleeve helps balance out risk.

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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 3 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 3 for one year, 3 for five years, and 3 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 2 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-03-12

In the annual Lipper/Barron's Fund Families Survey of 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. "This fund is supported by a shareholder-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 says.

Morningstar 2010-03-31

In the annual Lipper/Barron's Fund Families Survey of 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. "This fund is supported by a shareholder-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 says.

Morningstar 2010-03-31