American Funds New Leader

The Growth Fund of America from American Funds is now the nation's largest mutual fund, as its A shares alone comprise $71.5 billion in assets, according to USA Today.

In total, the fund has $124 billion in assets. In addition, six funds from American Funds are on the list of the top 10 largest stock funds, with a total of $465 billion in assets.

There are few things that have changed the ways in which investors are buying mutual funds, which directly affects the performance of the American Funds. For example, American Funds are the most popular broker-sold funds, and since the 2000 -2002 bear market, investors have become more willing to pay for advice.

The Growth Fund of America also charges 0.70% annually, which is less than the average stock fund at 1.5%.

"The industry has been critical of the media for writing so much about fees and expenses, but you know what? They matter," said Geoff Bobroff, president of Bobroff Consulting in East Greenwich, R.I.

Performance has always been an eye catcher, too, and the Growth Fund of America has gained 16% in the past five years, while the average large-company growth fund has lost 18% in the same time frame.

"If you take American Funds out of the large-company growth category, you get a really ugly picture," Bobroff said. "Most of the other fund companies in that category - Putnam, American Century, Janus - were just creamed."

Experts say that once a fund makes it to the top 10, it becomes too big to manage, as is the case with Fidelity Investments' Magellan fund, which has been lagging for the past five years.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.