The Four Best American Funds Mutual Funds
Points to know:
• American Funds has many well-known and highly-rated mutual funds.
• Some of their mutual funds come without loads or transaction fees.
• Four top-rated mutual funds are TAIFX, AIVEX, FAITX, and AIVEX.
Overview of Top Funds at American Funds
If you’re considering a new mutual fund, American Funds is worth a look. Managed by the respected Capital Group, this fund family includes many mutual funds with excellent analyst ratings. Below are four of their best offerings:
American Funds® Tax-Aware Conservative Growth and Income Portfolio (TAIFX)
TAIFX is American Funds’ Tax-Aware Conservative Growth and Income Fund. It’s a fund of funds, meaning its portfolio consists of other funds. These include both ETFs from Capital Group and mutual funds from American Funds. Examples are:
Capital Group Dividend Growers ETF (CGDG)
American High-Income Municipal Bond Fund® (AMHIX)
Capital World Growth and Income Fund® (RWIGX)
Morningstar rates TAIFX five stars out of five for its overall, 3-year, 5-year, and 10-year performance. It’s rare to find a fund with such consistently high ratings, making TAIFX stand out.
American Funds® International Vantage Fund (AIVEX)
Next is AIVEX, an international stock fund. While it doesn’t have perfect ratings, it earns four stars for overall, 3-year, and 10-year performance from Morningstar. Lipper also rates it four stars for overall and 3-year performance.
AIVEX is actively managed, which means it has a slightly higher expense ratio than index funds. However, at 0.92%, it’s still reasonable for many investors. With a portfolio turnover of just 15%, it’s not excessively traded.
The main appeal of AIVEX is its exposure to international stocks. The portfolio includes well-known companies like AstraZeneca PLC, Rolls-Royce Holdings PLC, and L'Oreal SA.
The minimum investment for AIVEX is just $250, making it accessible to smaller investors.
American Funds 2050 Target Date Retirement Fund® (FAITX)
For investors focused on domestic retirement savings, FAITX is an excellent choice. This lifecycle mutual fund is designed for retirement planning and has strong ratings from Morningstar. It scores five stars for its 10-year, 5-year, and overall performance. Lipper also gives it five stars for 10-year and 5-year performance. Its 10-year annualized return is an impressive 9.13%.
Like TAIFX, this target-date fund is also a fund of funds, consisting mostly of domestic-stock funds. About 10% of its portfolio is in bonds, and global stocks make up around 25%.
FAITX pays dividends and capital gains to its shareholders, making it an attractive option for tax-sheltered accounts. Its current 30-day SEC yield is 1.15%.
This fund is just one of many high-scoring lifecycle mutual funds offered by American Funds, with several other years available that also receive strong ratings.
The Tax-Exempt Bond Fund of America® (AFTFX)
The final fund in our list of top American Funds is AFTFX, also known as the Tax-Exempt Bond Fund of America. This fund primarily invests in bonds that are exempt from federal income tax and the alternative minimum tax. Even though it focuses on lower-yield debt, the fund has delivered an annualized return of 3.60% since it began. For most taxpayers, the tax savings can boost this yield to over 4%.
The fund’s yield and tax benefits are appealing. Morningstar rates it four stars for its overall and 10-year performance. Similarly, Lipper gives it a four-star rating for 3-year, 5-year, and overall performance.
It’s no surprise that AFTFX receives such strong ratings. Most bonds in its portfolio are investment grade, with a significant portion rated AAA, AA, or A. Examples of bonds held in the fund include:
| Issuer | Coupon | Maturity date |
|---|
| County of Jefferson, Limited Obligation Rev. Ref. Bonds | 5.00% | 9/15/2030 |
| Black Belt Energy Gas Dist., Gas Project Rev. Bonds | 5.50% | 10/1/2054 |
| City of Phoenix, Airport Rev. Bonds | 5.00% | 7/1/2049 |
Best Commission-Free Brokers
Fees
All the funds mentioned in this article are F-1 shares, which means they don’t have loads. These funds are designed for trading at discount brokerages that offer self-directed accounts. Some brokers, like Fidelity Investments, provide F-1 shares with no transaction fees. However, other brokers may charge transaction fees, so it’s important to check before making a trade.
Best American Funds Mutual Funds Judgment
With a low-cost brokerage account, self-directed investors can access great options from American Funds. If a broker also offers these funds without transaction fees, it becomes an even better deal.
Updated on 1/1/2025.
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