American Funds Capital World Growth And Income Fund

Scorecard
4 / 5 Stars
Lipper
3 3 4 1 4
Zacks Investment Research
3 (Hold)
Standard & Poor's
3 / 5 Stars
TheStreet.com
C- (Hold)

U.S. News evaluated 304 World Stock 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 21.54 percent over the past year, 9.86 percent over the past three years, 18.19 percent over the past five years, and 7.88 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 1.8%
1 Year 21.5%
3 Years (Annualized) 9.9%
5 Years (Annualized) 18.2%
10 Years (Annualized) 7.9%

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Summary

Slow and steady wins the race for American Funds Capital World Growth and Income Fund. The fund has seen long-term capital growth since its 1993 inception. It has low expenses and volatility, along with experienced management. The fund's strategy involves buying established companies with strong market positions and large cash flows.

As of March 05, 2014, the fund has assets totaling $82.30 billion. Its portfolio consists primarily of common stocks, government and corporate bonds, and cash and equivalents. The goal of the Capital World Growth and Income Fund is to provide long-term capital growth with current income by investing in established, growing companies in the United States and abroad. The fund is conservatively managed and invests primarily in blue-chip stocks issued by big-name companies from around the world that pay regular dividends.

During the downturn, this fund weathered the storm better than similar funds because of its investments in firms with steady earnings and little debt. Investments include a wide variety of cash-heavy names, as well as international financial firms like Banco Santander and pharmaceutical companies like Novartis. Still, the fund had a bit of a middling year in 2009 and got off to a slow start in 2010. The fund has returned 21.54 percent over the past year and 9.86 percent over the past three years.

Historically, the fund has invested in a range of big international names characterized by large cash flows and sizable dividends. Its returns have topped most of the funds in its category in 10 of the past 11 calendar years, according to Morningstar. The fund has returned 18.19 percent over the past five years and 7.88 percent over the past decade.

Investment Strategy

The fund's management focuses on yield by buying a large number of blue-chip stocks from around the globe that offer large dividends, then holding them for a long time. "One of the advantages of having non-U.S. dividend-paying companies is that in many markets they've sustained an emphasis on dividends over the years so you can find some really good quality companies that have paid dividends for years," says Dale Hanks, vice president with Capital Research and Management. The fund's investment strategy tilts toward value stocks. Management also invests in emerging-markets companies and occasionally in convertible bonds and preferred stocks.

Role in Portfolio

Morningstar says the fund plays a core role in an investment portfolio: "The fund simply executes better than most. It excels at finding bargains hiding in plain sight, buying shares in leading firms at a discount, often when they've oversold due to near-term issues."

Management

The fund is advised by Capital Research and Management Co., which oversees the managers in charge of this fund. Stephen Bepler, the fund's president, has been with the fund since its inception in 1993 and has been with Capital Research for 36 years. The portfolio of the fund is divided into segments run by individual managers who decide how each should be invested.

Fees

American Funds Capital World Growth And Income Fund has an expense ratio of 1.51 percent.

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Risk

The fund's management may invest up to 10 percent of its assets in bonds that are rated below investment grade.

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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 2 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 3 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 for 2010, American Funds ranks 49th out of 57 fund families surveyed.

Lipper

Morningstar gives the 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 2011-04-01

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

Lipper

Morningstar gives the 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 2011-04-01