529investing

The Growth Fund of America (CGFAX)

I reviewed several (not all, but most) of the 529 options offered in other states in a search for options for actively managed funds. I came across the Virginia College Savings PlanSM.  Virginia’s plan is administered by American Funds. That plan offers a fund called The Growth Fund of America®. This fund is actively managed by Capital Research and Management Company for American Funds. According to Morningstar, Capital Research is “…one of the industry’s most reputable active-management shops.”

The description is as follows (as of 22-Feb-2010): The fund’s objective is to provide you with growth of capital. Has the flexibility to invest wherever the best growth opportunities may be. Invests at least 65% of its assets in common stocks. May also invest in convertibles, preferred stocks, U.S. government securities, bonds and cash equivalents. May invest up to 15% of assets in securities of issuers domiciled outside the United States and Canada and not included in the S&P 500. May invest up to 10% of assets in debt securities rated below investment grade.

Source: https://www.americanfunds.com/funds/details.htm?fundGroupNumber=5&fundClassNumber=1000

Sounds like a real actively managed fund without too many restrictions on what type of assets the manager can buy. A mutual fund is only as good as its manager. According the Summary Prospectus dated 01-Nov-2009, this fund is managed by a board of counselors. The counselors have 5-28 years of experience managing this fund.

CGFAX_counselors

Investment Counselors for CGFAX

For the last 5 years, this fund is ranked 228 out of 1,265 funds in this category, which means it outperformed 1,037 funds in this 5-year period, not too bad. Finally, it has a reasonable expense ratio of 0.77% (according to the Summary Prospectus dated 01-Nov-2009). There is a front-end load of 5.75%. Not sure if that is waved for in-state residents or whether out-of-state participants have to pay it. I will have to investigate that because a front-end load will have an affect on overall performance.

CGFAX_Performance

Rank in Category

Ticker Symbol: CGFAX    http://finance.yahoo.com/q?s=CGFAX

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