The increased flexibility of the fund Capital Group AMCAP should enable it to withstand volatility and come out a winner.
Its cheapest shares retain a Morningstar analyst rating of “Silver,” while its most expensive shares earn “Bronze” and “Neutral” ratings.
Lack of investment talent has never been a problem.
Even with three separate retirements of long-serving managers since the end of 2020, the fund’s current eight-person team is still loaded with proven veterans.
James Terrile, for example, who took over as overall fund helm in 2018, has managed a diversified portion of the strategy’s portfolio since 2011, and his tenure as manager with US-domiciled US funds American Mutual dates back to the mid-2000s.
However, some big changes took place here around the start of 2021.
The company began encouraging managers to stay more fully invested – cash averaged 15% during the 2017 recovery – and updated eligibility criteria to add new companies to the portfolio of around 210 shares of this fund.
Managers now have more leeway to buy young companies whose promising business models are not yet reflected in their financial results, such as a modest position in electric vehicle manufacturer Rivian Automotive.
The timing of this multi-cap fund moving away from large cash holdings and focusing on its growth mandate has not been ideal.
Indeed, stocks like Rivian have so far hurt the fund in the 2022 bear market.
But the fund’s biggest recent detractor has been in the portfolio for about a decade, Netflix.
Netflix’s share price, which was in the top five at the start of the year, fell on concerns about slowing subscriber growth.
While the managers could have better anticipated Netflix’s difficulties and sold before the market caught up to it, they consistently took profits on Netflix. for years.
Indeed, the fund’s May 2022 shareholding in Netflix was down 43% from the strategy’s peak in September 2016.
Managers won’t get all the right picks, but this fund’s multi-cap growth mandate, combined with Capital Group’s robust pocket manager approach, makes this fund an attractive long-term option.
© Morningstar, 2022 – The information contained herein is for educational purposes and provided for informational purposes ONLY. It is not intended and should not be considered an invitation or encouragement to buy or sell the securities listed. Any comment is the opinion of its author and should not be considered a personalized recommendation. The information in this document should not be the sole source for making an investment decision. Be sure to contact a financial adviser or finance professional before making any investment decisions.
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