Morningstar's Janet Yang announced that it gave Capital group [ profile] American Funds an A for stewardship and gave an overview of its company culture.

American Funds has long been known as the fund that plays it safe, that won't embarrass you, even if it briefly did in 2008. It's that big-picture long-term view in an increasingly myopic world that makes it stand out from the pack.

Their multi manager system, which serves to create more diversified, less volatile funds, and it retains experienced professionals that are often lifers at the company. Yang writes that it also helps to have experienced PMs like Tim Armour, Rob Lovelace and Jim Rothenburg make up most of the firm's management committee.

Yang notes the impact of five consecutive years of asset outflows plus a secular decline of pension plan assets. These market pressures, she writes," have prompted a newfound desire to be more responsive to investor and advisor needs, bringing about a few more changes."

For example, American Funds is making PMs more aware of what their colleagues are doing. They are also using analyst and sector portfolios as models to help PMs better understand their allocations.

Though fixed-income efforts aren't very strong yet, Yang writes that she is confident AM will catch up after hiring senior level positions from outside the firm.

Yang doesn't let the firm off so easily though. Disclosure on the multi manager system is "insular but deficient" in what Yang calls the financial world's most transparent industry. Some PMs running less than 5 percent of a fund's assets aren't disclosed in fund documents and American Funds doesn't share what percentage of fund assets each portfolio manager runs, Yang laments.

To read more, click here. 

Correction: An earlier version of this story mistakenly used quotation marks, incorrectly attributing the second paragraph to a Morningstar analyst.

Edited by: Casey Quinlan


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