American Funds New Perspective Fund A: Worth The Investment?

The American Funds New Perspective Fund (ANWPX) is a mutual fund that seeks to provide investors with long-term capital growth by investing in multinational companies that benefit from evolving global trade patterns. The fund has a flexible approach to global growth and primarily invests in common stocks of large companies with strong growth prospects, both in the US and overseas. With a mix of securities from the US and abroad, the fund offers investors exposure to a diverse range of industries and markets. As of recent data, the fund has assets totaling over $100 billion and has delivered solid returns over the past year, three years, five years, and decade.

Investment objective

The investment objective of the American Funds New Perspective Fund A is to provide long-term growth of capital, with future income as a secondary objective. The fund seeks to achieve this by taking advantage of evolving global trade patterns and investing in multinational companies with strong growth prospects. This approach provides the fund's portfolio managers with geographic flexibility and the ability to navigate different markets.

The fund primarily invests in common stocks of companies located around the world, with a focus on those that have a significant portion of their sales and operations outside of their home countries. It may invest up to 100% of its assets outside the United States, although this is unlikely as the New Perspective Fund is a global fund.

The fund's top holdings include well-known companies such as Meta Platforms Inc Class A, Taiwan Semiconductor Manufacturing Co Ltd, and Novo Nordisk AS Class B. It has returned 12.24% over the past year, 4.46% over the past three years, 9.37% over the past five years, and 8.73% over the past decade.

The fund's risk level is considered average for the trailing three- and five-year periods and below average for the trailing 10-year period when compared to its peer group. The level of return is deemed above average for the trailing three- and five-year periods and high for the trailing 10-year period relative to its peers.

Overall, the American Funds New Perspective Fund A seeks to provide investors with long-term capital growth by investing in multinational companies that can benefit from evolving global trade patterns.

Performance

The American Funds New Perspective Fund A (ANWPX) has a strong performance history, with a 1-year return of 31.30% as of September 30, 2024. The fund has also generated positive returns over the past 5 and 10 years, with a 5-year return of 13.49% and a 10-year return of 11.41%. The fund's 3-year and 5-year returns are also impressive, with returns of 24.05% and 12.15% respectively.

As of November 27, 2023, the fund held assets totalling almost $117.04 billion, invested in 327 different holdings. The fund has consistently placed in the top percentiles of its category, ranking in the 16th percentile for the trailing 12 months, 11th percentile for the trailing 3 years, 10th percentile for the trailing 5 years, and 5th percentile for the trailing 10 years as of May 2017.

The fund's top holdings include well-known companies such as Amazon, Meta Platforms (Facebook), Taiwan Semiconductor Manufacturing, Microsoft, and Priceline. The fund's investment strategy focuses on multinational companies with strong growth prospects, particularly those benefiting from evolving global trade patterns. This approach has contributed to the fund's strong performance over the years.

In terms of volatility, the fund's risk level is considered average when compared to other funds in its peer group for the trailing 3- and 5-year periods. However, the trailing 10-year period is considered below average. The level of return is deemed above average for the trailing 3- and 5-year periods and high for the trailing 10 years relative to its peers.

The fund's expense ratio is relatively low at 0.75% to 0.77%, and it requires a minimum initial investment of $250. The fund also charges a front-end sales load of 5.75%, which is important to consider when evaluating the overall performance and potential costs of investing in the fund.

Overall, the American Funds New Perspective Fund A has demonstrated strong and consistent performance over the years, making it a potentially attractive investment option for those seeking long-term capital growth and exposure to multinational companies. However, as with any investment, it is important to carefully consider the risks and expenses associated with the fund before making a decision.

Holdings

The American Funds New Perspective Fund A seeks to provide long-term growth of capital with future income as a secondary objective. It aims to achieve this by investing in multinational companies based in the United States and overseas that have strong growth prospects. The fund's top holdings include Amazon, Meta Platforms Inc, Facebook, Taiwan Semiconductor Manufacturing, Microsoft, and Priceline. As of 30 September 2024, the fund held 327 different holdings, with 23.8% of assets in the top 10 holdings.

The fund predominantly invests in common stocks of large companies with established records, believed to have the potential for growth. It falls into Morningstar's world large-stock category, meaning the managers invest primarily in the largest segment of the stock market based on market cap in the U.S. and non-U.S. markets. As of 30 September 2024, 42.5% of its holdings were in non-U.S. equities.

The fund may invest up to 100% of its assets outside the United States, although this is unlikely as it is a global fund. As of 31 March 2017, the fund was overweight in technology and consumer cyclicals compared to its benchmark, while being underweight in financials and health care.

The fund's investment strategy focuses on multinational blue-chip companies and careful investment in emerging markets. It offers a flexible approach to global growth by seeking to take advantage of evolving global trade patterns.

Management

The American Funds New Perspective Fund is managed by a team of seven, whose management tenure ranges from 2000 to 2012. This team approach is typical of the various funds in the American Funds family. The fund's investment objective is to provide long-term growth of capital.

The fund's management team has a flexible approach to global growth. They seek to take advantage of evolving global trade patterns by predominantly investing in multinational companies with strong growth prospects. This includes investing in common stocks that are believed to have growth potential. The fund may invest up to 100% of its assets outside the United States, although this is unlikely as it is a global fund.

The fund's top holdings include Amazon, Facebook, Taiwan Semiconductor Manufacturing, Microsoft, and Priceline. As of March 31, 2017, the fund was overweight compared to its benchmark in technology and consumer cyclicals, while being underweight in financials and healthcare.

Morningstar has given the fund a positive rating, noting that it has "a veteran management team, robust analytical support, and a proven process focusing on firms benefiting from global trade."

Risk

Secondly, investing in a global fund like ANWPX, which can invest up to 100% of its assets outside the United States, brings additional risks. These include currency fluctuations, periods of illiquidity, and price volatility, especially when investing in developing countries. Country-specific risks, such as political instability or economic downturns, can also impact the fund's performance.

Thirdly, ANWPX has a front-end sales load of 5.75%, meaning that for every $10,000 invested, $575 goes towards sales commissions. This sales load reduces the amount of money available for investment and can impact overall returns, especially in the short term.

Additionally, the fund's expense ratio, while considered low at 0.72-0.77%, still represents an ongoing cost that can affect returns over time. It's important to note that all stock mutual funds are subject to market risks, and there is always the possibility of underperformance or even loss of principal.

Lastly, the volatility of the fund, as measured by standard deviation, provides insight into the variability of returns. A higher standard deviation indicates greater volatility and potential for wider fluctuations in returns. While historical volatility does not guarantee future results, it can give investors an idea of the level of risk associated with the fund.

In summary, investing in the American Funds New Perspective Fund A (ANWPX) carries risks common to stock mutual funds, as well as those associated with its focus on multinational companies and global investments. Investors should carefully consider these risks, along with the fund's fees and expenses, before making any investment decisions.

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