![]() Capital Group, the operator of the AF, was founded at the beginning of the Great Depression in 1932. Also to be clear, Redwall is not an investment adviser and is making no investment recommendations.ĭuring the 2000 bear market, Redwall put substantial research into its investment strategy, and concluded that the AF had a competitive advantage over other mutual fund groups. All the code is available on Github for anybody to replicate. We have no relationship with the AF, and for the most part are sympathetic to those who say that index funds may be the best choice for most investors. If we have made any mistakes in our assumptions or the data used, we welcome polite commentary to set us straight. ![]() It is important also to credit Matt Dancho and his amazing Business Science Learning Labs Pro #9 for many of the ideas for using the quantmod and PerformanceAnalytics packages as we have here. We will also consider the possibility that AF’s declining out-performance versus our customized benchmark over the last 15 years may have to do with growing fee differentials with index alternatives.Īs usual, Redwall would like to avoid defending to any particular viewpoint other than to follow the data and see where it leads. In this article, we will download the weekly closing prices of the relevant AF and the most comparable Vanguard Funds, re-construct our portfolio and estimate the corresponding weighting of different asset classes for each, replicate a relevant benchmark portfolio of Vanguard index funds, and explore their relative performance histories over the period to try to square the two perspectives. This analysis struck us in conflict with our own experience as actual holders of a core portfolio of eight AF over the last 20 years, so this post will be about exploring this data. In the post, there is a supporting chart showing a group of American Funds (“AF”) funds compared to the Vanguard Total Market (“TMI”) index. Asset Builder asserts that “Even without this commission, the S&P 500 beat the aggregate returns of these (”American“) funds over the past 1-, 3-, 5-, 10- and 15-year periods”. The inspiration for this article is this post by Asset Builder blog site American Funds Says, “We Can Beat Index Funds” scrutinizing claims by the fund group. A growing list of commentators appropriately advocate for index funds, although sometimes go a little beyond what we believe to be fairly representing the facts. Active funds have done poorly over the last ten years, and in most cases, struggled to justify their fees.
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