American Funds vs Vanguard

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Paisley
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American Funds vs Vanguard

Post by Paisley »

I remember reading somewhere that Dan Solin said that his hand was forced and he HAD to invest with an active mutual fund company that he would go with American Funds. I recall him being somewhat complimentary of their management structure and investment guidelines.
Does anyone know if American Funds is still viewed as favorably as it has been in the past and the reason/s why or why not?
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David Jay
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Re: American Funds vs Vanguard

Post by David Jay »

Does that really sound favorable to you: “If someone held a gun to my head and said I couldn’t have my index funds, American Funds is one of the least-bad active fund providers.

There is no way that I would ever pay a front-load. Period. End of Discussion.
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lukestuckenhymer
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Re: American Funds vs Vanguard

Post by lukestuckenhymer »

American Funds have some of the highest ERs and loads I've seen. I would not view them favorably.
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Paisley
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Re: American Funds vs Vanguard

Post by Paisley »

David Jay wrote: Thu Apr 18, 2019 3:39 pm Does that really sound favorable to you: “If someone held a gun to my head and said I couldn’t have my index funds, American Funds is one of the least-bad active fund providers.

There is no way that I would ever pay a front-load. Period. End of Discussion.
LOL LOL :sharebeer
vu8
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Re: American Funds vs Vanguard

Post by vu8 »

AVOID american funds like plagues, together with Leveraged funds, inverse funds, commodity funds, Proshares, Guggenheim, Global X, Direxion, Wisdom Tree, Flexshares, MFS Financial Management, Franklin Templeton...
Last edited by vu8 on Thu Apr 18, 2019 3:50 pm, edited 2 times in total.
Trader Joe
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Re: American Funds vs Vanguard

Post by Trader Joe »

Paisley wrote: Thu Apr 18, 2019 3:28 pm I remember reading somewhere that Dan Solin said that his hand was forced and he HAD to invest with an active mutual fund company that he would go with American Funds. I recall him being somewhat complimentary of their management structure and investment guidelines.
Does anyone know if American Funds is still viewed as favorably as it has been in the past and the reason/s why or why not?
I do not view American Funds favorably due to their very high cost. I invest in the Vanguard S&P 500 (VFIAX) and I am very happy with both the low cost and my high performance.
Explorer
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Re: American Funds vs Vanguard

Post by Explorer »

David Jay wrote: Thu Apr 18, 2019 3:39 pm Does that really sound favorable to you: “If someone held a gun to my head and said I couldn’t have my index funds, American Funds is one of the least-bad active fund providers.

There is no way that I would ever pay a front-load. Period. End of Discussion.
Hmm.. American funds introduced F1 share class a few years ago that are no load/no transaction fee on most broker platforms including Vanguard, Fidelity, Schwab, Merrill and others..

Agree that American Funds' ERs are higher.. but let us not discount the fact that their total assets under management in huuuuuge -:)

Just like TRowe Price, and many other mutual fund companies... American is a fine choice just as long as you make/like the decision to go with them.
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Re: American Funds vs Vanguard

Post by DesertDiva »

If someone held a gun to my head, I might be forced to do something that wasn't good for me. The better decision is what I would decide without this fictional gun involved. Then the answer would be crystal clear.
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Re: American Funds vs Vanguard

Post by FinanceStudent »

I manage my sister's investments and put her international equity allocation for her deferred comp plan in American Funds Europacific Growth. I can't remember which share class it was but it was available no-load in the plan and I didn't think the expense ratio was that outrageous. That being said, I did choose the fund since there were no international equity index funds available, but it doesn't seem like too bad of a choice to me. It has pretty consistently beat its benchmark over multi-year periods (though I'm aware of the dangers of relying on past performance) and the upside/downside capture ratio is decent.
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Re: American Funds vs Vanguard

Post by Bronco Billy »

I have EJ inherited IRA funded with AF. They had load fees when purchased and ER are kind of high. EJ showed in the last 4 years they are up an average 6% to 9.5%. They have been keeping up with my DADs RMD. I am also a BIG fan of VFIAX and it has also done well. I believe my AF might have been doing better.

AMCPX, ANCFX, ANEFX, ABALX, AIVSX, ANWPX and SMCWX
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Nate79
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Re: American Funds vs Vanguard

Post by Nate79 »

American Funds is a well respected but active management company. I have their Europac fund in my 401k with an ER of 0.49. Overall they are one of the better active management fund companies.
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Michael Patrick
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Re: American Funds vs Vanguard

Post by Michael Patrick »

My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
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Kenkat
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Re: American Funds vs Vanguard

Post by Kenkat »

American funds are relatively low cost and low turnover active funds. They have had decent performance overall. I prefer Vanguard’s index and active funds but thy are not a terrible choice if you don’t have that option.
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Re: American Funds vs Vanguard

Post by HEDGEFUNDIE »

Europacific Growth Fund has destroyed Vanguard Total International since inception.
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Random Musings
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Re: American Funds vs Vanguard

Post by Random Musings »

I believe Larry Swedrie did an analysis of some AF funds a few years back and chose their lowest cost funds R something. As a fund family, I believe the result was that alpha was generated over 15 years, but not statistically significant. But more recent asset bloat made the five year returns having very little alpha at all. Turnover for AF funds are relatively low for active funds, so tax issues aren't too bad. He also said if you had to go active, AF would be a reasonable choice, or something like that.

However, if you can't get their lowest cost funds with no front end load or 12b1 fees, passive is more likely a better case.

RM
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retire2022
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Re: American Funds vs Vanguard

Post by retire2022 »

op

Have you ever heard of PrimeCap?

"Primecap’s founders learned the process at Capital Group, the publicity-shy firm behind the American Funds. The trio—Howard Schow (who died in 2012), Mitch Milias (who stepped down from day-to-day management duties in 2014) and Kolokotrones—left Capital Group in 1983 to start Primecap Management."

https://www.kiplinger.com/article/inves ... -seen.html

John Bogle write up of PrimeCap http://johncbogle.com/wordpress/wp-cont ... ersary.pdf
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Re: American Funds vs Vanguard

Post by Determined »

I have American Funds in a 403b that I no longer can contribute to due to changes my employer made. I am still employed with the school district so I can’t roll it over. It has done extremely well. Opened it about 20 years ago with a total investment of $30k. It’s value is $88k today.

I am not saying I would choose it now, but I could have done worse.
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Re: American Funds vs Vanguard

Post by venkman »

Explorer wrote: Thu Apr 18, 2019 4:06 pm Hmm.. American funds introduced F1 share class a few years ago that are no load/no transaction fee on most broker platforms including Vanguard, Fidelity, Schwab, Merrill and others..
American Funds website wrote:Class F-1, F-2, F-3 and 529-F-1 shares are designed for investors who choose to compensate their financial professional based on the total assets in their portfolios, rather than commissions or sales charges.
So, instead of paying a one-time load up front, you can pay an AUM fee forever...
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Re: American Funds vs Vanguard

Post by dougger5 »

Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
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Re: American Funds vs Vanguard

Post by Nowizard »

Do expenses always determine fund choices, or is total return the primary issue?

Tim
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Michael Patrick
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Re: American Funds vs Vanguard

Post by Michael Patrick »

dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
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Re: American Funds vs Vanguard

Post by ROIGuy »

Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
+1 :sharebeer
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Re: American Funds vs Vanguard

Post by Nate79 »

Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
So who is going to pay the advisor?
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Re: American Funds vs Vanguard

Post by ROIGuy »

Nate79 wrote: Fri Apr 19, 2019 8:03 am
Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
So who is going to pay the advisor?
They can earn their money as a fee based.
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Re: American Funds vs Vanguard

Post by deltaneutral83 »

HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
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Re: American Funds vs Vanguard

Post by Michael Patrick »

Nate79 wrote: Fri Apr 19, 2019 8:03 am
Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
So who is going to pay the advisor?
I'm not sure why I should pay for an advisor when I never asked for advice, and when the advice I did get was about how to make him money and not how to increase our earnings?
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Re: American Funds vs Vanguard

Post by goingup »

Paisley wrote: Thu Apr 18, 2019 3:28 pm I remember reading somewhere that Dan Solin said that his hand was forced and he HAD to invest with an active mutual fund company that he would go with American Funds. I recall him being somewhat complimentary of their management structure and investment guidelines.
Does anyone know if American Funds is still viewed as favorably as it has been in the past and the reason/s why or why not?
American Funds (Capital Group) are considered to be well-managed funds. Jack Bogle and Larry Swedroe have said good things about the company. The problem is the load, the ER, and the fact they're tethered to an advisor for retail investors. (I can't figure out if F shares can be held without an advisor.)

My SO has held American Balanced R shares (ER .28) in a 401K for more than 10 years. It's had good returns and I compare it to Wellington Fund, which it regularly outpaces because of a Growth orientation, rather than Value.

Another issue with American Funds is that they throw off a lot of distributions (dividends and capital gains) yearly. Some investors like those income streams and others, who try to limit distributions for tax reasons, won't love that.
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Re: American Funds vs Vanguard

Post by UpperNwGuy »

Seems like the arguments against American Funds are:
— active management
— higher expense ratios
— need an advisor
— not total market
— lots of distributions (not tax-efficient)

I don't understand why a Boglehead would voluntarily go there.
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Re: American Funds vs Vanguard

Post by Nate79 »

Michael Patrick wrote: Fri Apr 19, 2019 8:33 am
Nate79 wrote: Fri Apr 19, 2019 8:03 am
Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm
Michael Patrick wrote: Thu Apr 18, 2019 7:56 pm My wife's employer's SIMPLE is American Funds through a local broker. The sales loads are nuts.

The only available fund without a load is a money market. She's maxed out on her VG Roth IRA, so we deposit enough into the money market to get her up to 12% of gross (also counting what goes into the VG Roth) and also take her employer's 3% match into the same fund. I scrape it out of there regularly and transfer it to her traditional IRA at VG.
We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
So who is going to pay the advisor?
I'm not sure why I should pay for an advisor when I never asked for advice, and when the advice I did get was about how to make him money and not how to increase our earnings?
So why are you using a service that has an advisor which needs to be paid for his time? If this is an employer plan then your employer has chosen to have an advisor and make the employee pay for it. If it is the case the employer sucks because of poor choice and making their employees pay for the plan costs. So complain to the employer.
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Re: American Funds vs Vanguard

Post by averagedude »

American funds are probably the largest actively managed mutual fund family in the world. Overall, most of their funds have beat their benchmarks and the past performance of their funds are well respected. I would still choose index funds, because the problem with active management is there is no way of knowing if the active management of these funds will outperform their benchmarks in the future. The only thing i can control on mutual fund performance in the future is load and fee costs.
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Paisley
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Re: American Funds vs Vanguard

Post by Paisley »

I think diversifying with American Funds, Vanguard and BlackRock (I like BlackRock AGG) and DFA might not be a bad strategy.
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Re: American Funds vs Vanguard

Post by onourway »

Paisley wrote: Fri Apr 19, 2019 9:52 am I think diversifying with American Funds, Vanguard and BlackRock (I like BlackRock AGG) and DFA might not be a bad strategy.
If you already own the entire market through your 3-fund portfolio, I don't think adding additional brokerages is going to add any kind of meaningful diversity. You are simply rolling the dice that one of those managed funds might take off. The opposite may happen as well.

Barring some strong reason otherwise, I would strive for simplicity.
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Re: American Funds vs Vanguard

Post by HEDGEFUNDIE »

deltaneutral83 wrote: Fri Apr 19, 2019 8:17 am
HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
And what is your point exactly?

If I wanted to pick one International fund for my three fund portfolio, why would these two funds not be comparable?

And just to indulge you for a second, here is the comparison between Europacific Growth and Vanguard International Growth:

https://www.portfoliovisualizer.com/fun ... F18%2F2019
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Re: American Funds vs Vanguard

Post by Dottie57 »

Nate79 wrote: Thu Apr 18, 2019 7:42 pm American Funds is a well respected but active management company. I have their Europac fund in my 401k with an ER of 0.49. Overall they are one of the better active management fund companies.
The only thing I have against them is the front load and perhaps 12b-1 fees. They did fine in my IRA during the Great Recession.

However I prefer index funds.
Last edited by Dottie57 on Fri Apr 19, 2019 1:49 pm, edited 1 time in total.
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Re: American Funds vs Vanguard

Post by Toons »

Capital Income Builder
Investment Company of America
25 years.
No complaints.
For a Load Fund,
I would invest with American.

:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: American Funds vs Vanguard

Post by onourway »

HEDGEFUNDIE wrote: Fri Apr 19, 2019 1:27 pm
deltaneutral83 wrote: Fri Apr 19, 2019 8:17 am
HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
And what is your point exactly?

If I wanted to pick one International fund for my three fund portfolio, why would these two funds not be comparable?

And just to indulge you for a second, here is the comparison between Europacific Growth and Vanguard International Growth:

https://www.portfoliovisualizer.com/fun ... F18%2F2019
Re-run the comparison over the past 5, 10, 20 years and the results look very different. This is the case with many American Funds - most of their out-performance happens early in the fund's life, then they are lucky if they are able to match a similar index after cost.

FWIW most of my NW was built through American Funds in my 401k (fortunately with no loads - I've since diversified because I don't believe that picking a fund that HAS performed well in the past is of any value for the future).
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Re: American Funds vs Vanguard

Post by HEDGEFUNDIE »

onourway wrote: Fri Apr 19, 2019 2:01 pm
HEDGEFUNDIE wrote: Fri Apr 19, 2019 1:27 pm
deltaneutral83 wrote: Fri Apr 19, 2019 8:17 am
HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
And what is your point exactly?

If I wanted to pick one International fund for my three fund portfolio, why would these two funds not be comparable?

And just to indulge you for a second, here is the comparison between Europacific Growth and Vanguard International Growth:

https://www.portfoliovisualizer.com/fun ... F18%2F2019
Re-run the comparison over the past 5, 10, 20 years and the results look very different. This is the case with many American Funds - most of their out-performance happens early in the fund's life, then they are lucky if they are able to match a similar index after cost.

FWIW most of my NW was built through American Funds in my 401k (fortunately with no loads - I've since diversified because I don't believe that picking a fund that HAS performed well in the past is of any value for the future).
The telltale chart shows the American Fund outperforming for the first 20 years, and the Vanguard Fund outperforming for the next (last) 10 years.

Btw the Vanguard Fund is also actively managed, and holds only 121 stocks, one of which is AMZN :confused. Talk about 🍎 and 🍊 .
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Re: American Funds vs Vanguard

Post by deltaneutral83 »

HEDGEFUNDIE wrote: Fri Apr 19, 2019 1:27 pm
deltaneutral83 wrote: Fri Apr 19, 2019 8:17 am
HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
And what is your point exactly?

If I wanted to pick one International fund for my three fund portfolio, why would these two funds not be comparable?

And just to indulge you for a second, here is the comparison between Europacific Growth and Vanguard International Growth:

https://www.portfoliovisualizer.com/fun ... F18%2F2019
If you've got thousands of posts on BH and still haven't picked up the point I don't know if I can summarize any more clearly as a BH. This AF is heavily tilted toward growth, and has zero small caps. The vanguard total international is .......a total international fund, market weighted. They are not apples to apples to me when their style boxes are this different. Hence the apples to oranges comment I made earlier. To the degree that they are different may be an issue of debate, but to the issue of them being substantially different in their makeup I do not believe to be.
HEDGEFUNDIE
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Re: American Funds vs Vanguard

Post by HEDGEFUNDIE »

deltaneutral83 wrote: Fri Apr 19, 2019 2:55 pm
HEDGEFUNDIE wrote: Fri Apr 19, 2019 1:27 pm
deltaneutral83 wrote: Fri Apr 19, 2019 8:17 am
HEDGEFUNDIE wrote: Thu Apr 18, 2019 8:04 pm Europacific Growth Fund has destroyed Vanguard Total International since inception.
Can't believe people drove past this but this fund is 16/26/48 on the top line and VTIAX is 26/26/23. Growth has done well the last ten years, these two funds are apples to oranges. Much in the same way Merriman and Swedroe tilt to small cap value, the Euro growth fund is HEAVILY tilted to large cap growth and has zero small cap and very little mid cap whereas VTIAX is the total market weight.
And what is your point exactly?

If I wanted to pick one International fund for my three fund portfolio, why would these two funds not be comparable?

And just to indulge you for a second, here is the comparison between Europacific Growth and Vanguard International Growth:

https://www.portfoliovisualizer.com/fun ... F18%2F2019
If you've got thousands of posts on BH and still haven't picked up the point I don't know if I can summarize any more clearly as a BH. This AF is heavily tilted toward growth, and has zero small caps. The vanguard total international is .......a total international fund, market weighted. They are not apples to apples to me when their style boxes are this different. Hence the apples to oranges comment I made earlier. To the degree that they are different may be an issue of debate, but to the issue of them being substantially different in their makeup I do not believe to be.
I understand perfectly what you’re saying. I just think it’s the wrong way to pick funds.

Why do we start building AAs with the bonds vs stocks split? Because bonds and stocks have meaningfully different risk and return profiles.

And once we’ve established stocks vs bonds, why do we then look at US vs. International? Again, because this split also has meaningfully different underlying drivers.

But large vs small? Much less so. Growth vs value? Nope.

There is a reason we BHs don’t regularly talk about those latter dimensions when giving advice to newcomers. It is because they are characteristics that are much less meaningful than Stocks vs Bonds or US vs. International.

So again, I ask: why should we not consider Vanguard Total International and Europacific Growth to be proper benchmarks for each other?

Here is an analogy. If I were to ask you whether I should buy a Ford F-150 or a Tesla Model 3, you would look at me funny. But if I were to ask you whether I should buy a Tesla Model 3 or a BMW 3 series, is that just as ridiculous, just because one is an electric car?
Katietsu
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Re: American Funds vs Vanguard

Post by Katietsu »

My opinion on the original question is that American Funds are respectable. As to the negatives, some are on a case by case basis. My MIL has most of her nest egg in American Funds. Her average ER is probably about 0.8. But she pays no sales charge, no AUM, no wrap. She gets the services of a local CFP who actually provides financial planning services not just investment management. She is not comfortable accessing any accounts online even credit cards. And banks with a teller face to face- not even drive through.

So, when she first opened up a bit about her finances, I was concerned about the fees, products and services she was experiencing. My conclusion was that the AF were reasonable as were the fees and services given her parameters.

I am an investor comfortable with selecting my own index funds, filing my own taxes, and managing my accounts with discount online brokerages. I, therefore, would never buy an AF for myself.

So, IMO, AF may be the best option for some people or in some retirement plans.
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dougger5
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Re: American Funds vs Vanguard

Post by dougger5 »

Nate79 wrote: Fri Apr 19, 2019 9:22 am
Michael Patrick wrote: Fri Apr 19, 2019 8:33 am
Nate79 wrote: Fri Apr 19, 2019 8:03 am
Michael Patrick wrote: Fri Apr 19, 2019 7:47 am
dougger5 wrote: Thu Apr 18, 2019 9:30 pm

We have a similar situation/strategy. The only difference is we have a frozen SIMPLE at VG, and do monthly transfers. AF balance never gets higher than a little bit more than one month's contribution + match.

The local "advisor" told her in the introductory interview that this would not be possible. I think about that every time I fill out the current month's transfer authorization from :twisted:
My wife's local "advisor" complained when she was asking about funds with no load. He said "That's how I get paid." I said we are saving for our retirement, not his.
So who is going to pay the advisor?
I'm not sure why I should pay for an advisor when I never asked for advice, and when the advice I did get was about how to make him money and not how to increase our earnings?
So why are you using a service that has an advisor which needs to be paid for his time? If this is an employer plan then your employer has chosen to have an advisor and make the employee pay for it. If it is the case the employer sucks because of poor choice and making their employees pay for the plan costs. So complain to the employer.
In my case, complaining to her employer is effectively not an option. And when there's an option (the VG frozen SIMPLE) to avoid most of the fees (can't avoid the annual maintenance fee, or whatever they call it), it's not worth risking fallout from the acrimony.

I'll let the other employees, including the boss with several more years of post-grad education than I have, finance the advisor's lifestyle.

As to the acceptability of AF, I guess it comes down to whether one believes that they provide an advantage to lower-cost alternatives net of expense.

I do not.
"I've been ionized, but I'm okay now." -Buckaroo Banzai
272 Sheep
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Re: American Funds vs Vanguard

Post by 272 Sheep »

Charles Ellis, former Vanguard board member, has high praise for American Funds Corporate Culture.
https://www.kiplinger.com/article/inves ... harge.html
Wrote a book about 5 of the best companies in US and Capital Group (American Funds) was one of them. The others were, Goldman Sachs, Kinsey, Mayo Clinic and forgot the other.
Just because they may have a wonderful Corporate culture doesn't necessarily mean its going to translate into doing anything for me.
(I know it sounds so selfish.)
Carl W.
Gadget
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Re: American Funds vs Vanguard

Post by Gadget »

If someone pointed a gun to my head, I would give them all my money.

Between criminals and financial advisors using front end load funds, I guess it's the same principle. Just one is a real gun and one is metaphorical.
Trader Joe
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Re: American Funds vs Vanguard

Post by Trader Joe »

UpperNwGuy wrote: Fri Apr 19, 2019 9:14 am Seems like the arguments against American Funds are:
— active management
— higher expense ratios
— need an advisor
— not total market
— lots of distributions (not tax-efficient)

I don't understand why a Boglehead would voluntarily go there.
The answer is lack of knowledge.
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Paisley
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Re: American Funds vs Vanguard

Post by Paisley »

Gadget wrote: Fri Apr 19, 2019 7:51 pm If someone pointed a gun to my head, I would give them all my money.

Between criminals and financial advisors using front end load funds, I guess it's the same principle. Just one is a real gun and one is metaphorical.
LOL
centrifuge41
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Re: American Funds vs Vanguard

Post by centrifuge41 »

Yeah, I agree. I wouldn't voluntarily pick American Funds. But if that was what was in a 401k without cheaper index fund choices, and the share class was R6 (no load, 0.2x%-0.4x% fee), I wouldn't be too upset.

Growth Fund of America R6 (RGAGX) vs Vanguard Total Stock Index Admiral (VTSAX) vs Vanguard Growth Index Admiral (VIGAX): link

Europacific Growth R6 (RERGX) vs Vanguard Developed Markets Index Admiral (VTMGX) vs Vanguard Total Intl Admiral (VTIAX): link

Income Fund of America R6 (RBFGX) vs Vanguard Total Bond Index Admiral (VBTLX): link
Topic Author
Paisley
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Re: American Funds vs Vanguard

Post by Paisley »

Isn't it true that Growth Fund of America has held up very well against index funds?
HEDGEFUNDIE
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Re: American Funds vs Vanguard

Post by HEDGEFUNDIE »

Paisley wrote: Fri Apr 19, 2019 9:24 pm Isn't it true that Growth Fund of America has held up very well against index funds?
Man, what a great fund
TristanKing
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Re: American Funds vs Vanguard

Post by TristanKing »

Paisley,
I have been checking out this site for a while and finally decided to join and start posting today. This is my first.

Regarding American Funds, if you are going to go the active route American Funds is as good as it gets. They have a unique team approach to portfolio management which reduces the risk of the "star manager" leaving, they are a privately owned company, their analysts and managers are paid on longer term performance, they have low turnover inside the funds (less capital gains and most taxed at long term rates), their expense ratios are lower than most other active managers,they have very low turnover within the company, and they happen to have great long term investment performance.

Charles Ellis wrote a great book about the company called "Capital - The story of long term investment excellence". Capital Group owns American Funds. He is a huge fan of them. Charles was on the board at Vanguard for many years, was chair of the investment committee at Yale with David Swensen, taught courses at Harvard and Yale on investing, has written tons of great books about investing, and is a huge fan of passive investing. Basically - the guy is one of the smartest investment minds on planet earth, and he loves the company. So, hard to argue with him.

Yes, in some instances you must pay an upfront load to access their funds. This would be if you wanted to buy their "A" shares. You can access other share classes at most firms though where you dont have to pay that upfront fee. Whether that is in a retirement plan (bigger the plan the lower the fees), if you are going through a platform like Fidelity, or even if you use a financial advisor. Fee based advisors who use them use the F2 share class. The fees for some of their best funds in there are very low, compared to other active. Growth Fund of America - .42%, New Perspective .55%, Income Fund of America .39%, American Balanced Fund .39%, you get the point.

Also, I know a lot of folks at Vanguard and they have a ton of respect for American Funds and speak highly of them.

Bottom line - if you want active, American Funds has to be in the conversation of options you use.
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nedsaid
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Re: American Funds vs Vanguard

Post by nedsaid »

TristanKing, your first post was excellent. I too am a fan of American Funds. Brokers loved them because they performed well and will never embarrass you with bad performance. They are well managed funds. I own Capital Income Builder and Bond Fund of America, and yes I paid the loads on them. I also owned EuroPacific Growth at a workplace savings plan but sold when I rolled my funds into a rollover IRA.
A fool and his money are good for business.
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