Survey: American Funds rates high among advisers

Nov 4, 2012 @ 12:01 am

By Jason Kephart

Despite three-plus years of outflows stemming from lackluster performance by its largest mutual funds, American Funds remains a force when it comes to financial advisers' loyalty, according to a new study by Cogent Research LLC.

“We've seen declines in American Funds flows and assets, but in terms of brand equity, they're still at the top of the list,” said Linda York, research director at Cogent.

More than 15% of advisers chose American as the fund company with which they feel the strongest connection, in terms of products and services, making it the top choice among all providers, according to Cogent. Franklin Resources Inc. and BlackRock Inc. rounded out the top three.

“A lot of American Funds' success had to do with their long-standing and very successful relationship with advisers,” Ms. York said.

The survey results paint a much different picture than the past few years would suggest.

American's fund assets have fallen to $916 billion, from its 2007 peak of $1.2 trillion, thanks to more than three straight years of outflows.

This year through Sept. 30, advisers pulled more than $44 billion out of the funds, compared with $81 billion last year, Morningstar Inc. said.

Along with relatively poor performance during the financial crisis, American has been affected by a shift toward the representative-as-portfolio-manager model, which has sparked an explosion in demand for low-cost, passive exchange-traded funds.

The fact that American still is top-of-mind for advisers suggests that it may not take much to get flows back in the black, Ms. York said.

“Advisers haven't forgotten about them,” she said. “If they can turn around performance, it could be good for them.”

jkephart@investmentnews.com Twitter: @jasonkephart

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