Is there a place for this mutual fund in investors'
portfolios?
Does American Funds Investment Company of America's mandate and
huge asset base leave it betwixt and between?
There's plenty to like about this large-value fund. Like most of its siblings, it's run
by a sizable roster of veteran managers (each working independently), who are in
turn supported by a very large analyst staff. The fund also has a low 0.54%
expense ratio, making it one of the cheapest actively managed large-value funds
around. That means that more of the dividend yield from this fund's
holdings--which is substantial, because the managers seek income as part of their
strategy--flows through to shareholders.
The fund's approach also holds some appeal. Its preference for dividend payers
results in a portfolio dominated by financially stable companies with distinct
competitive advantages. And yet the fund is more opportunistic than large-value
siblings American Mutual AMRMX and Washington Mutual AWSHX; the managers
are more willing to include growth-oriented names like software maker
Oracle ORCL at the top of the portfolio. Because the managers have recently found
such companies to be relatively cheap, the fund's portfolios have lately landed in
the large-blend portion of the Morningstar Style Box.
Until very recently, the fund's less-value-oriented tack has been out of favor--
witness the fund's subpar relative returns for much of 2003 to 2006. However, as
investors have turned to larger companies with stable earnings growth more
recently, the fund has thrived, and we expect it to continue to look good if
mega-caps stay in favor.
However, we think investors have better options in the American Funds lineup.
Those seeking a dividend-focused large-value fund would be better off with Analyst
Pick Washington Mutual, while those who like this fund's opportunistic streak
should check out the more aggressive--and nimble--Fundamental Investors ANCFX.
Process Pillar: | Greg Carlson 08/14/2007
The fund favors established blue-chip companies, many of which pay dividends. As
a result, the fund devotes a decent portion of assets to stocks in industries such as
oil services, financials, and tobacco. But management is also willing to scoop up
shares in depressed growth names. Thus, it isn't surprising to see stocks that are
typically considered growth stocks in its portfolio. Management will also keep a
decent chunk of assets parked in bonds and cash at times.
People Pillar: | Greg Carlson 08/14/2007
The fund is managed by a veteran nine-person team. The firm's research
capabilities are hard to match as it employs more than 140 investment pros
globally. Investors will also be hard-pressed to find analysts with greater industry
expertise. Joyce Gordon, for example, has followed banks since 1987. Both
managers and analysts are compensated in part based on how their picks perform
versus a benchmark over a four-year moving average.
Parent Pillar: Positive | Janet Yang, CFA 07/19/2013
The deep roots of American Funds' more than 80 years of investing success are
many and intertwined, though for the most part, they can be traced to a few
sources: the firm's trademark multimanager system; a stable and long-tenured
team of investment professionals; and an incentive system that allows those
professionals to take the long-term view in an increasingly myopic market.
Combined, American and its parent company, Capital Group, have leveraged those
characteristics to impressive results, particularly on the equity side of their
business, where the vast majority of American's assets under management reside.
The firm's fixed-income efforts haven't always enjoyed the same level of
performance success. American continues to search for ways to adapt its
multimanager process to the bond markets, and while there are signs that the firm
remains several years behind its similarly resourced peers, recent high-level,
Morningstar's Take AIVSX
Morningstar Pillars
Parent Positive
Role in Portfolio
Core. This fund's all-weather potential makes it a terrific core
holding.
AIVSX : Analyst Report | Analyst Report http://analysisreport.morningstar.com/fund/archive?t=AIVSX®ion=U...
1 of 2 1/19/2014 2:34 PM
outside hires bring with them the possibility that it will not take as long to catch up
with the competition.
Other aspects of the business have been changing too, including new product
launches and adjustments to the firm's organization. Overall, though, combined
with the firm's unique manager incentives and peer-beating fees, American Funds
remains a model steward of investor assets.
S&P 500 index data: S&P 500 Copyright @ 2014
All data from Morningstar except U.S. intraday real-time exchange quotes, which are provided by BATS when
available. End-of-day quotes for Nasdaq, NYSE, and Amex securities will appear 15 minutes after close. Graph
times are Eastern Standard. @ Copyright 2014 Morningstar, Inc.
AIVSX : Analyst Report | Analyst Report http://analysisreport.morningstar.com/fund/archive?t=AIVSX®ion=U...
2 of 2 1/19/2014 2:34 PM