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I am curious about the criteria used by the District Court when they were in effect. Google being what it is these days, I could spend a long time searching the internet for that answer. I am hoping someone here can please point me in the direction of more information on the topic, or otherwise provide it.The fund has Investment Standards originally based upon criteria established by the United States District Court for the District of Columbia for determining eligibility under the Court’s Legal List procedure, which was in effect for many years. The fund has an “Eligible List” — based on the Investment Standards — of securities considered appropriate for a prudent investor seeking opportunities for income and growth of principal consistent with common stock investing.
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Eligible Lists are pretty self-explanatory in the legal and certification sectors: did you pass the exam or other official criteria? You're eligible.
AF WaMu is often called the 'windows and pensioners' fund, and for good reason.
We had Washington Mutual and many other American Funds for many years- we largely built our present economic situation on American Funds. Worked for us.
The Legal List idea is kind of outdated now. It was replaced in most jurisdictions by the Prudent Investor Rule, especially after the Uniform Prudent Investor Act was adopted by most U.S. states starting in the 1990s. As Modern Portfolio Theory became more widely accepted, fund managers moved toward broader risk-adjusted return frameworks that include a wider variety of asset classes and sectors. Obviously, many funds still follow its the style, but most don’t really talk about it anymore in their marketing or official rules. One big exception is Washington Mutual Investors.
as far as criteria the courts used, it was largely credit quality, dividend history, established blue chippiness, avoiding high risk (junk bonds, penny stocks), needed income focus and there were even industry and sector restrictions.
In addition to a bazillion share classes, American Funds has a lot of strategies that seem very similar to each other.
True.
I am also very heavy in AF equity funds for the long-haul and they've worked well for me, too.
in the early 90's American Mutual was all Large Value stocks and about 15% bonds. Washington Mutual was 75/25 Large Value/Large Growth and Investment co of Am was a true Large blend. Meanwhile Growth Fund was largely a Midcap blend.
They all still have mild differences and over long periods have slightly different outcomes but in the end its still hard to figure the difference.
I'm looking for equity funds for the IRA for when I decide to get back into the market. The low r-square of 83 for AMFFX does catch my eye. The capture ratios are nothing to write home about, but it did better than a lot of funds in the 2022 interest-rate Osterizer.
RMD's are still three years off. So I'm in no hurry.
If I use 20% Mag 7 as a threshold (as of a couple of weeks ago), AFIFX comes in well under the wire at 17.5%. And it typically holds over 15% foreign (per M* analysis); currently 16.5%. In contrast, AICFX misses the cut at 22.5% Mag 7 (about 30% more), and it holds just half as much in foreign stocks (8.6%).
Viewed up close, comparing these as two LC Bl funds, they appear substantially different. Pull back the lens and likely they will be seen to have converged over time. I agree that it does seem hard to tell the funds apart without a microscope.
Regarding eligible lists, M* observes that a few years ago AICFX reduced its target yield, and consequently could add some more growth companies to its eligible list.
These days, ISTM that many funds still use eligible lists, though they don't call it that. Rather, they say simply that they invest in S&P 500 stocks, or in R2K stocks, or whatever. They're just outsourcing the maintenance of their eligible lists. (Well, AF creates its funds eligible lists based on their funds' objectives, so they're more tailored.)
I also like to look at returns from 2022 and 2020.
Are you using MFO premium to screen for the =< 20% for the Mag 7?
BTW, my interest in the old Washington Mutual eligibility list was mostly historical curiosity. It's always interesting to look back at what people believed would be prudent.
R-1R-5 class has no 12-b-1 fee. Nothing fancy I in portfolio construction - 40% EM, developed market, and some bonds. Very steady returns with out the volatility of dedicated EM funds.Just brute force, I'm afraid. Sorted funds by 3 year returns and looked at their portfolios. Time consuming, but it had the benefit of getting me to glance at many funds I'd never heard of. (I've found that playing with numbers though tedious usually offers some enlightenment.)
Also, some of the funds hold over 20% in Mag 7 but under 20% in their top 10 holdings.
For example, M* reports that AICFX had 18.8% of assets in Mag 7 in its top 10 holdings (Microsoft 6.4%, Meta 4.5%, Amazon 3.6%, Nvidia 2.3%, Alphabet C 2.1%). Apple (1.89%) and Alphabet A (1.83%) are among its next ten holdings.
While I'm not much of a fan of American Funds since they became so large and FD came around, I do appreciate their management style and the ability to hover around their indexes while reducing risk in many instances (usually by including 8-15% international stocks)
I used to think of American Funds as Vanguard plus a load, i.e. relatively cheap, well managed, nothing extreme. Perhaps due to growth, American Funds offerings have become more homogenous as you've observed, though now more accessible (e.g. F1 shares). Vanguard has gone in other directions, with various less-than-successful launches such as alternative investments (VASFX closed April 19, 2023) and managed payout funds (three different offerings merged into one in 2014 and payouts terminated in 2020).
The R-1 class his no 12-b-1 fee.
R-5 or higher?
I had a feeling it was going to come down to eyeballing the allocations the old-fashioned way. At the present time it's not like I have lots of alternatives to wade through at Fido.