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title: Become an Expert in American Funds description: [AFW M.1.13 & AFW S.4] Michael's Epiphany #13 published: true date: 2026-06-30T08:11:25.535Z tags: editor: markdown dateCreated: 2021-09-11T06:16:38.369Z

Commonly Known, Uncommonly Mastered

"Be an inch wide and a mile deep in your expertise. It's better to know 99% about 1% of the funds than the other way around." ―Michael

Two "secrets" of our business that are available to most independent Advisors but not often mastered, are:

  1. American Funds mutual funds.
  2. Nick Murray, the Advisor to Advisors.


What Nick Murray Says...

"It is quite possible to become an immensely successful investor without ever having owned a fund with more than three stars. You just have to dollar-cost average into those funds every month of your working life. Then when you retire, you do systematic withdrawals at a rate less than your type of fund's index return." ―Nick Murray

"At the end of an investor's life, less than 5% of his total lifetime return will come from what his investments did versus other, similar investments. The other 95% will come from how the investor behaved. And the primary determinant of that behavior will be the quality of the advice he gets, or doesn't get." ―Nick Murray


Info on American Funds

Tabs

Basic Info
  • Founded in 1931.
  • American Funds is a division of Capital Group, one of the largest asset management firms in the world with over $2.7 trillion in assets under management, ahead of Fidelity Investments, and the second-largest fund family overall after Vanguard.
Contact Info
  • Account Services: 800.421.0180
  • Fax: 888.421.4351
  • Retirement Accounts mailing addresses:
    • Capital Bank and Trust Company, P.O. Box 2560, Norfolk, VA 23501-2560
    • Capital Bank and Trust Company, P.O. Box 6164, Indianapolis, IN 46206-6164
  • American Funds Advisor site
Public Resources
Advisor Resourcs


Why Amerian Funds?

Watch Why American Funds? VIDEO

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Lessons

  • What the client does is more important than how the investment does.
  • The Advisor is the primary influencer.
  • Your key role is managing client's behavior, not picking funds.


Funds Still Matter

Even though we know that behavior is the key to investment success, we might as well select the best funds we can.

  • Performance does havve an affect on the client's plan.
  • Better funds instill belief in the plan and in you.
  • You have stronger convictions regarding your recommendations.


Three Values That Are Aligned With Ours

The three of their values that are aligned with ours (and Nick Murray's), and thus make them a wonderful solution for our investment philosophy, are:


  1. The Capital System is distinctive way of managing money. Early in Capital Group's history, they realized that their funds would outlast the professionals who managed them. So they asked themselves a key question: If a portfolio manager left the firm, how could they keep funds going strong?

    Answer: By dividing funds into sections and giving each of the existing managers a portion to administer, no fund would be too dependent on a single person.

    “By incorporating the highest conviction investment ideas of each manager in a fund, we aim to both increase the diversity of those ideas and reduce the volatility of a fund, which can give you a smoother ride in bumpy markets.”

Read Nick's ATY 180 June 29 - Randomness of Outperformance PDF


  1. They take a long-term approach. Their investment managers’ compensation is tied to short-, medium- and long-term results, with a greater focus on the long term. Also, Capital Group is a privately held firm, so rather than being distracted by what’s good for "the Street," they can focus on what’s best for long-term investors.

    “We invest in companies for the long-term, not buy stocks for the short-term.” ―this was told to me personally by one of their fund managers.


  1. Their deep and fundamental research is the backbone to delivering superior results. They believe that the best way to get to know a company is to know the people behind the business. they get to know both upper management and the employees on the ground.

    “Meetings are essential to our research. Our investment professionals conducted more than 20,000 meetings with companies in 2023.”



What the Experts Say about American Funds

“There are 290,000 financial advisors in America. 212,000 of those own a Capital Group strategy for their clients.” ―Mike Gitlin

"For the entirety of my half-century career, no mutual fund company has ever championed long-term equity investing as consistently, cloquently and even relentlessly as have the American Funds. Indeed, there's been nobody close; the American Funds group has been in a class by itself. I have always applauded them for this unreservedly." -Nick Murray

"Welcome to what many believe to be the world’s best fund management organization." -Financial Times

"American Funds sells mutual funds you could bring home to meet your parents: the funds are described with words like steady, solid, and dependable" -Boston Globe, September, 17 2004

"The American Funds family of mutual funds is one of the largest of its kind in the world because investors and advisers alike are attracted to the low-cost, high-quality attributes that combine for the best funds to buy. You’ll especially find American funds in retirement accounts like IRAs and 401(k)s because their portfolio managers’ long-term outlook and dozens of years of experience result in portfolios that are built to last."

"Therefore American mutual funds don’t often hit the lists of best short-term performers — they are typically among the best performers for long-term periods, such as over five and 10 years and beyond." -InvestorChoice, December 2015

"They have funds that have consistently outperformed and consistently been lower-cost versus their active peers." -Todd Rosenbluth, director of ETF and mutual-fund research at CFRA

“American Funds very visibly accomplishes what index-fund proponents claim cannot be done: outperform year after year, decade after decade.” -Morningstar, January 30, 2014

“American Funds gives you Nordstrom service with Tesla performance at Walmart prices.” -Michael Paulding Thomas

"A long-term broadly diversified collection of the world's great publicly-traded, mainstream companies (ie, mutual fund), is the finest, most transparent, simplest, low-stress and most effective of any investment in the history of humankind. And American Funds is the best at it." -Michael Paulding Thomas

"American Funds sells mutual funds you could bring home to meet your parents: the funds are described with words like “steady,” “solid,” and “dependable." -The Boston Globe, September 17, 2004

"The American Funds group has won a legion of admirers for its distinctive investment approach... ‘We like their management and their people,’ says a marketer for one of the fund’s biggest distributors. ‘We like their buy-and-hold philosophy. They don’t surprise us.... They’re defensively managed." -Barron’s, January 12, 2004

"The American Funds line-up follows an ‘old-school’ approach that is coming back into favor, said an analyst at Morningstar.... ‘They buy for the long-term because they like the business....’ There is also an emphasis on dividend-paying stocks, which is timely because of tax breaks which took effect last year. American Funds wins fans with conservative style." -Reuters News, January 9, 2004

"American Funds has a strong record of acting in shareholders’ interests, by keeping costs low and focusing on long-term results.... We think that their funds... remain attractive options." -Morningstar Mutual Funds, January 6, 2004

"American Funds has focused more on retaining the top investment talent... than on gimmicks such as rolling out new funds." -Morningstar Fund Family Reports: American Funds, December 2003

"As for why they’re steering their clients toward American Funds, advisers mainly say it’s their consistent performance and low annual cost — qualities that seem to engender a considerable level of trust." --Dow Jones News Service, October 13, 2003

"American Funds has always done an excellent job of educating us.... American would give us excellent publications for our clients. If we put clients in A-share funds, they would get great, NASD-approved, A-share fund newsletters — well-written publications on current market conditions...." -Quoted from an adviser in “Sold, not bought,” in Financial Planning, August 1, 2003


In this 23-minute Youtube video (2024-06), Mike Gitlin, CEO of Capital Group, joins David Rubenstein on Bloomberg Wealth. At a minimum, watch the first 12 minutes and the last 5.


This is a collection of quotes and thoughts of what the experts say about them. It's a 10-minute read.


Capital: The Story of Long-Term Investment Excellence by Charles D. Ellis BOOK "Capital (American Funds) is the best managed investment organization… that I’ve known as a consultant over the past 40 years. I’m confident that Capital is one of the best and quite likely the best designed, best staffed, and one of the best managed professional firms in the world."

"Capital, the parent firm of American Funds, is one of the finest business organizations in American Business. This book was written by an index fund/no-load proponent who was looking to debunk American Funds (which are neither indexed, nor no-load) and instead he discovered their exceptional values, performance and pricing. This story is fast-paced and highly interesting, both to Advisors and clients." -from the forward of the book.


Working With the ICA Guide

Watch AMF - ICA Guide pages walkthrough (1) - The 3 Most Powerful Pages of the ICA Guide VIDEO

Watch AMF - ICA Guide pages walkthrough (2) - inflation, Boones, Klausens VIDEO

Watch AMF - ICA - Boones vs Klausens VIDEO

Watch AMF - ICA Guide pages walkthrough (3) - ICA training with Dave McDanal VIDEO

Watch AMF - ICA Guide pages walkthrough (4) - Withdrawals, Profile Page VIDEO

Watch AMF - ICA - Stock Picking pages VIDEO


Miscellaneous Training


To learn more about how AMF A-share breakpoints work visit AFW S.1.


Using AMF Automatic Re-Balancing together with Automatic Monthly Drafts

Watch Using AMF monthy draft with automatic rebalancing VIDEO


Daily Account Activity Summary Email Notifications

With this feature you will receive daily emails about account updates (including established accounts are established, transfers, PACs etc) and client service reminders.

Go to your “Email Preferences” in your AMF account settings to turn it on. Direct Link


Client login for American Funds

In order for your clients to have a login at American Funds they just need the account number for one of their accounts, their SSN. Then go to the web site and "create an account". Once created, they can start/stop bank drafts, change the draft date, and they can "create a portfolio" which allows *spouses* to each other's accounts.


Creating a Portfolio Planner

Watch AMF Creating Portfolio Planning VIDEO


Creating a Hypothetical

Watch AMF Creating a Hypothetical VIDEO


Fund Selection

Watch AMF fund filters & growth portfolio VIDEO

Based upon Nick Murray suggested allocation in Simple Wealth, Inevitable Wealth, but since American Funds doesn't differentiate between "growth-style" and "value-style" investing, it would look like this for AMF funds:

  1. Large Cap - Growth & Income (for example, Investment Company of America)
  2. Small Cap - Aggressive Growth (for example, Growth Fund of America
  3. International (for example, New Perspective Fund)


Morningstar's Three Filters

Study by Capital Group based upon Morningstar, U.S. Large-Cap Equity. 10-year monthly rolling periods, from 12/31/1996 - 2016.


Filters 1 & 2 Details


Filter 3 Details

The third criteria is low downside capture ratio — to consistently outpace benchmark indexes in the distribution phase.

  • Another important trait is low downside capture, which refers to a fund’s ability to outpace indexes during market declines.

  • Funds that provide resilience during downturns and less volatility can be especially important in retirement, when investors are taking withdrawals.


Summary of Morningstar's Three Filters

Low expense ratios and high management ownership have been historically associated with a strong track record against indexes. We found that adding a third trait, downside capture, to the investment selection process enhanced results during withdrawal scenarios.


15 American Funds that Pass All Three Filters


Michael's Four Filters

Run a screen on AMF’s Fund Screener using the following 4 filters: (all-equity funds, A-Shares)

  1. Inception: >= 50 years
  2. Annual expense: < 0.75%
  3. ROR: > 11% (since inception)
  4. Standard Deviation < 20


Eight AMF Funds Pass Michael's Four Filters and Morningstar's Three Filters


AMF Growth Portfolio

Another option, and my favoirte, is to use the American Funds pre-allocated Growth Portfolio. Some key stats, as of Jan 2026:


How to Introduce It to Your Client

"The American Funds Growth Portfolio consists of six of American Funds' best funds. Most have been in existence for over 30 years and invest in more than 1,325 of the world's great publicly-traded, mainstream companies. The total annual cost is only 0.74% (which is very low) and it has averaged over 12% return."


Additional Benefits

  • Much less work for the Advsor:
  • It has automatic quarterly rebalancing.
  • It is treated as one fund (not six).
  • The investment minimums are treated as one fund, such as a $50 PAC.
  • Your client only sees "one" fund not six, thus dissuades second-guessing fund selection.
  • Reporting just "one" rate-of-return to the client, etc.


Capital Group KKR U.S. Equity+

Watch AF MKOM 1701: New Fund! Captial Group KKR Equity+ VIDEO



Michael's Simple Fund Selection

See my diagram on AFW S.10 - Designing the Finished Plan.