American Funds Income Fund Of America Fund

Scorecard
4 / 5 Stars
Lipper
5 5 4 5 2
Zacks Investment Research
3 (Hold)
Standard & Poor's
4 / 5 Stars
TheStreet.com
C+ (Hold)

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 14.98 percent over the past year, 10.04 percent over the past three years, 17.01 percent over the past five years, and 6.37 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 1.7%
1 Year 15.0%
3 Years (Annualized) 10.0%
5 Years (Annualized) 17.0%
10 Years (Annualized) 6.4%

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Summary

Investors who had high hopes for the Income Fund of America, in bear markets as well as bull, have been somewhat disappointed in the fund’s recent performance, but those with a long-term outlook will quickly point out that as of the end of May, the fund has returned an average of about 11 percent since it began in 1970.

As of March 05, 2014, the fund has assets totaling $87.17 billion. Its portfolio is fairly balanced, with a slight bias toward U.S. stocks alongside moderate holdings of bonds and foreign equities.

This fund is for income-seekers. Managment invests in a mix of dividend-paying stocks and bonds, including low-quality, high-yield debt. As of the end of May, its largest equity holdings include a mix of recognizable U.S. names like Verizon and AT&T but also some international holdings like French-based energy giant GDF Suez, which hint at management's increased interest in foreign firms in recent years. Other investments include large holdings of consumer goods companies like Kraft Foods and pharmaceutical names like Merck and Bristol-Myers Squibb. The fund has returned 14.98 percent over the past year and 10.04 percent over the past three years.

About a third of the company’s portfolio consists of bonds—almost a third of which are made up of lower quality, high-yielding bonds rated BB or below. Still, a nimble bond team and a conservative stock portfolio helped the fund outperform the majority of its peers over the past decade. The fund has returned 17.01 percent over the past five years and 6.37 percent over the past decade.

Investment Strategy

The fund is a traditional equity-income value fund that strives to provide its investors with steady income along with capital growth. The fund typically invests in large-cap companies. American says that it generally invests at least 60 percent of its assets in equity-based securities.

Role in Portfolio

Role in portfolio: Morningstar gives it a “core” role and says, “This fund is a solid option for investors in search of current income.”

Management

Like other American family funds, this fund is run by a team of “counselors” instead of just a single manager. The fund is headed up by nine portfolio managers from the fund’s adviser, Capital Research and Management, which has managed the fund for more than 30 years.

Fees

American Funds Income Fund Of America Fund has an expense ratio of 1.38 percent.

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Risk

For income, the fund depends on dividend-paying stocks, and there is no guarantee that the dividends will remain consistent. They can fluctuate in value. Also, some of the fixed-income securities held by the fund are heavily affected by interest rates because of their longer maturation periods.

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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 4 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

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “The system allows for more people to make buy-and-sell decisions for multibillion-dollar portfolios, a much flatter structure than what exists at most other large shops.”

Morningstar 2011-01-04

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

2010-02-17

Morningstar gives this fund a stewardship rating of A on a scale of A to F, saying, “The system allows for more people to make buy-and-sell decisions for multibillion-dollar portfolios, a much flatter structure than what exists at most other large shops.”

Morningstar 2011-01-04

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

2010-02-17