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The Growth Fund of America Is What Type of Fund It Is. How Many Firms Are in the Growth Fund of America?

Even if any company could successfully manage one of the world’s largest actively managed mutual funds, it would be Capital Group, which is the parent company of the Growth Fund of America. As part of its unique multimanager method, the firm divides the huge roughly $250 billion asset base among all three of its equity subsidiaries and then divides those allocations into smaller, independent sleeves within those subsidiaries.

The strategy has 13 named managers, each of whom manages a $5 billion to $15 billion portfolio with a different investment style, resulting in a diversified 350-stock portfolio. The strategy has 13 named managers, each of whom manages a $5 billion to $15 billion portfolio.

“The Growth Fund of America” Is What Type of Fund It Is?

This strategy does not have the appearance of a traditional large-growth fund. The fund’s managers strive to provide broad diversity across industries and firms, and the fund has done a good job of achieving this. In order to accomplish this, the managers’ vast investing universe includes international companies that generate significant revenue from the United States. As of December 2021, the company’s about 11 percent allocation to non-U.S. investments placed it in the top percentile of large-growth Morningstar Category peers.

While the Russell 1000 Growth Index has gotten more concentrated at the top over the past decade, the strategy has also become more concentrated at the top, albeit to a lesser extent. For example, the index has over half of its assets in its top ten holdings, whereas the strategy only has 37 percent of its assets in its top ten holdings.

The Growth Fund of America' Is What Type of Fund It Is. How Many Firms Are in the Growth Fund of America?

In addition, the approach is not as heavily weighted toward technology as the growth index, which has a 46 percent weighting toward the sector. Its 25 percent allocation to technology is more in line with the S and P 500’s 28 percent.

Technique

The technique of measured growth employed by the plan was successful up to the global financial crisis of 2007-09, but it has recently encountered resistance. The A-shares annual gain of 14.9 percent, which ended in February 2022, was behind the growth index’s rise of 17 percent over the same period. The underweighting of the major firms and the United States had a negative impact on results.

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Although the fund underperformed the growth index during the market cycles of the dot-com bubble in the early 2000s and subsequent lead-up to the financial crisis, overseas equities outperformed their American equivalents during the period. However, despite the apparent problems associated with its magnitude, the approach has maintained its core advantages, which will serve it well in the future.

Investment Strategy

Even though the growth fund has done well over the years, its size makes it more difficult for it to outperform its peers and the index it is based on. It mostly invests in stocks in the United States, but it also has some investments outside the United States. Like other American funds, it has a lot of different portfolio managers. In this way, each part of the portfolio is managed separately.

The Growth Fund of America' Is What Type of Fund It Is. How Many Firms Are in the Growth Fund of America?

Role in Portfolio

Morningstar describes this fund as a “core” player in an investment portfolio, calling the fund an “excellent choice to anchor the growth portion of a portfolio.”

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Management

Management of the fund is overseen by Donnalisa Parks Barnum, Barry Crosthwaite, J. Blair Frank, Greg Ireland, Carl Kawaja, Michael Kerr, Ronald Morrow, Donald O’Neal, Martin Romo, James Rothenberg, James Terrile, and Bradley Vogt. The fund was established by Donnalisa Parks Barnum and Barry Crosthwaite in 1995.

There have been four seasoned fund managers replaced since 2011. Currently, the fund is managed by 12 managers who oversee a variety of strategies and asset classes while also determining how their respective segments will be allocated to other funds.

Performance

Within one year, the fund returned 19.34 percent, 28.20 percent within three years, 20.88 percent within five years, and 17.92 percent within ten years.

Volatility Measurements

Volatility measures reflect the uncertainty or risk of change in a security`s value.

Standard Deviation – 18.083
Mean – 2.222
Sharpe Ratio – 1.425

 

Top 9 Firms in the Growth Fund of America

Tesla, Inc. Equity 20,623,010 $21,793,984,508.00 7.46%
Microsoft Corp. Equity 53,100,917 $17,858,900,405.00 6.11%
Amazon.com, Inc. Equity 3,971,536 $13,242,451,346.00 4.53%
Netflix, Inc. Equity 21,850,756 $13,163,769,445.00 4.51%
Meta Platforms, Inc., Class A Equity 35,478,411 $11,933,163,540.00 4.09%
Capital Group Central Cash Fund Short Term 99,399,615 $9,940,955,535.00 3.4%
Alphabet, Inc., Class C Equity 3,002,603 $8,688,302,015.00 2.97%
UnitedHealth Group, Inc. Equity 13,729,241 $6,894,001,076.00 2.36%
Alphabet, Inc., Class A Equity 2,037,768 $5,903,495,407.00 2.02%

 

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