The Capital Group Companies have introduced the American Funds Portfolio Series, a group of eight new mutual funds designed to help financial advisors get their clients back into the market.
"The past three or four years have been rough on advisors' clients and some investors may be traumatized," says Denise Cassin, senior vice president and director of the Individual Investor Business for American Fund Distributors Inc.
This has led some investors to have too much in cash and to be afraid to get back into the market, she says. The eight new mutual funds of funds that are part of the American Funds Portfolio Series are designed to help advisors easily guide their clients back into the market, she says.
The new fund of funds also are designed to allow advisors to easily address the challenges of providing retirement income, adding exposure to global companies, reducing taxes for high-net-worth clients and adding growth potential to any account, American Funds says.
Capital Group Companies has 200,000 advisors with $12.5 trillion in assets under advisement. The American Funds share of that is $850 billion in assets under management.
The new funds are grouped into three categories. The Tax-Exempt Preservation Portfolio and the Preservation Portfolio make up the preservation funds of funds.
The Tax-Advantaged Income Portfolio, Income Portfolio, Balanced Portfolio and Growth and Income Portfolio make up the middle ground of balanced funds.
The Growth Portfolio and Global Growth Portfolio make up the more aggressive appreciation segment.
The funds of funds are described by American Funds as objective-based, meaning they are designed to fulfill the goals of the investor rather than being based on asset classes, Cassin says.
"We find this helps advisors because it fits well with how people think about their money," she says. "The short term is for more immediate expenses and emergencies, so it is designed for stability and preservation. Then you have some longer term for growth; that is the balance funds. Then for the much longer-term investments, such as retirement, you have the growth or appreciation funds," she says. "We have been listening to what advisors want. They can discuss the shorter-term goals with clients as a way to begin to get back into investing. They have to determine what the client is trying to accomplish and consider their emotional mindset."