Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors’ net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise and objective summaries of mutual funds and ETFs for comparisons within investment asset classes.
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The diversified investment fund strategy of the Income Fund of America mutual fund
At approximately $91 billion in assets with 2.2 million shareholder accounts, the Income Fund of America is a very large actively managed mutual fund. This fund can invest worldwide, however it focuses largely on U.S. equity and debt securities. Recently, 20% of this mutual fund’s portfolio assets were invested in non-U.S. equities and 4% of portfolio assets were invested in non-U.S. bonds.
According to the American Funds mutual fund prospectus for the Income Fund of America, this mutual fund “seeks to provide you with current income and, secondarily, to make your investment grow. It invests primarily in a broad range of income-producing securities, including stocks and bonds. Generally, the fund will invest a substantial portion of its assets in equity-type securities.”
The statement of its investment limitations and guidelines in its recent 497 filing on the U.S. Securities and Exchange Commission’s EDGAR system indicates that “under normal circumstances…” the Income Fund of America “…will invest at least 65% of its assets in income-producing securities.” The fund will normally invest 60% or more of portfolio assets in stocks.
Under its investment guidelines, this fund can invest as much as 20% of its portfolio in non-convertible debt instruments that have a Standard & Poor’s Corporation rating of BB or lower or the equivalent ratings by the Moody’s Investors Service.
No more than 25% of the portfolio would normally be invested in the stocks “of issuers domiciled outside the United States and not included in the S&P 500 Composite Index.” Given this relatively low upper limitation for non-U.S. stocks and the fund’s recent 20% weighting in [...]