It should be noted what else is supplied when the 'load' or broker is paid. What you get is a financial advisor for the remaining time you own that fund. An advisor for advice, bouncing ideas off of, and yes, whining during downturns. How long do you typically hold a mutual fund? Long term right? So you get a broker for 7 -10 years or even longer. Do they get paid during this? Yes, that little 12b-1 which is roughly .25 bps on the principle. I wonder if it is worth it? Well, where would your account be today if you had a worthy financial advisor to ask advice of? Not all are good, but when you find a good one, that lousy quarter point seems pretty good. Keep in mind, like mentioned before, there are many funds that have loads. It doesnt mean American funds gets sold more because they are better. It is also because they are recognized and an easy sell, and yes, a good product too, so that helps. There is too much to explain and not enough time. Hope this helps. You won't walk into a bank to invest and not be offered American. It's a good product, but also good name recognition and marketing.

I do think they are a company that is often sold via commissions; the performance and lower operating fees are probably what makes them an easy choice for brokers.

But, many advisors who access them without the load and 12b-1 fees also sometimes select their funds because of the team aspect in how they are managed.

Just because a broker's 401k is with American Funds shouldn't mean anything to you. For one, they won't be paying the expenses you will. They also may give themselves options they don't bring up to their 401k plan sales.

Logic does not follow that paying advisors makes American Funds bad. Advisors have hundreds of load funds to chose from, so if they are suggesting American, they probably feel those will best serve their clients. The second issue about getting paid is worth discussion. As with any professional that offers a service, they should be paid. Your dentist doesn't offer no load fillings, does she? There may be folks that enjoy getting their hands dirty and being their own financial advisor, but just like becoming a pilot to fly your own plane, if you are managing your own investments, the cost of not knowing how to handle a situation correctly or making a mistake, is high. Lastly, fees need to be put in perspective. A number of American Fund's funds have beat the market, including any fees a customer would pay.

I disagree with the staff's answers for two reasons; American Funds has superior long term performance and a unique management style staffed by a highly diversified and experienced management team.

It's difficult if not impossible to find any fund group with the consistant market beating returns (over a five year or longer period) than the American Funds. The diversity and experience level of the managers in this group is unmatched.
Sure in any year or three, there's always a period where the American Funds underperform the market

Let's all focus on the elephant in the room for a moment. Everyone here has agreed that the American Funds have performed well.

It seems to me the argument among us is about the sales load and whether or not advisors only recommend these funds to get paid.
Note: I say "load" is an issue because 12b-1's included, American Funds ongoing management fees are among the lowest in the universe of funds.

As humans with independent minds we're not all going to agree on anything and we could argue these items to the end of time. It's fair to say that if an investor wanted help picking out a portfolio of mutual funds they could do a lot worse than the paying a load for the American Funds.

All anyone needs to do is compare any of the American Funds growth and income funds to the Vanguard S&P500 index over ten years or more to see why advisors recommend these funds. I didn't say they're the best ever. I said an investor could do much worse.

"American Funds are sold via financial advisers who collect a fee (known as the "load") when they sell the fund to investors. So many advisers financially gain from selling American Funds to investors."

There are many financial advisors that do not collect "loads" for their client's investments in American Funds. In some cases, clients may be charged on a fee-only basis for their total assets under management, regardless of whether or not they are invested in American Funds mutual funds. However, fee schedules vary between what type of "financial advisor" you have-- RIA, broker-dealer rep, etc.

There are also F-2 class shares of a few of the funds American Funds offers, that are no load funds without any 12b-1 fees. Check out this link for more info regarding American Funds' share classes and fee structures: https://www.americanfunds.com/funds/classes/details.htm

To comment on your follow up questions: fees vary fund by fund. Morningstar does a good job breaking out the fees and other important fund factors in its mutual fund database. I'd try looking up the funds you're considering there and do a side by side comparison of their fees.

Hope that helps,
Kristen

American Funds are sold via financial advisers who collect a fee (known as the "load") when they sell the fund to investors. So many advisers financially gain from selling American Funds to investors.

This is not to say that they are selling bad products. The American Fund Family has a solid reputation and has performed well over the years. But the fees associated with these funds are steep - and cut into investors' returns.

There are plenty of no-load funds out there. I'd recommend looking into a no-load option before investing in an American Fund.