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American Funds Invmt Co of Amer A Message Board

  • jimmontgomery1947 jimmontgomery1947 May 4, 2007 9:44 PM Flag

    How much does it hurt to make money?

    Now I've only been in this fund for a while.

    I can't help being impressed with it's overall performance since I joined.

    It's also my belief that a good management team in a fund is able to do very good predictions on which areas of the economy are moving and in which direction will they move.
    Also, with the large amount of capital in a fund, it is able to make or break a stock for a short period.

    While I'm not attributing that characteristic verbatim to American Funds, I will say that I'm quite pleased with its performance while I've owned it.

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    • If you've only held this fund for a while you will be pleased. Every market index is at all time highs right now.

      Problem is this is a front loaded fund. The fund manager makes 5.75% off the bat if the fund is successful or bombs. How much incentive is that? Additionally the fees are not that great compared to similar funds, especially index funds.

      Advisors (that get comissions off these expensive funds will show you charts that indicate funds of this type fall less in down markets that the indexes do and are worth the load. Here's what you need to ask them to do for you.

      1. Ask for a load adjusted return vs the index. You lose everytime because the fund has to do 5.75% just to break even. That's not really true, the fund has to do 5.75% for YOU to break even, the fund alreay has your money.

      2. Get a chart that shows both up and down markets. The loaded fund won't beat the index in the up markets and you have still lost the 5.75% load.

      3. Ask the clown that sold you this how much he/his company gets for each sale. Then find a fee-based advisor.

      If you have money in this or any other loaded fund, you might as well leave it. You have already paid the load. Just don't put anymore into it. Get into a good low-cost index fund instead.

      Some posters have shown what seems like high returns but are actually lower than the index average for the same time period.

      Bottom line, loaded funds tend to be less volitile so you don't loose as much when the market falls but you don't gain as much when it rises. Over time they average out to generally the same return. However, you have lost the huge front load.

      Loaded funds are never a good investment.

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