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Wednesday, October 10, 2012

Has American Funds Started Chasing Trends?

News summary by MFWire's editors

American Funds is planning to introduce three new bond funds next year, Jason Kephart of InvestmentNews reports.

They will be a global investment-grade fund, a global high yield, and a TIPS fund.

Normally this sort of news wouldn't get much attention -- but this is American Funds, a firm that launched all of three new funds between 2000 and 2010, Kephart writes. Is American Funds defying its decades-old modus operandi of refusing to chase trends?

Morningstar mutual fund analyst Kevin McDevitt thinks that might be the case. He told Kephart that this move is "very out of character" for American Funds, a firm that has "never been one to launch what's trendy."

American Funds' bond funds have been attracting net inflows this year, in contrast to the firm's equity funds. The shop has $84 billion in fixed-income AUM, with $603 million in inflows through the end of August, compared to $38.8 billion of equity fund outflows during that same period, Kephart reports.

"You have to wonder, with such consistent outflows over three-plus years, if it's not, in some way, a response," he said.

This move will bring American Funds' bond lineup to ten, compared to fifteen equity funds.  

Edited by: Chris Cumming

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