Capital Group’s $200 billion+ Investment Company of America fund has kept pace with the changes since its inception in 1934.
Anita Patel, an investment director and public spokesperson for the strategy, told MarketWatch in an interview that the fund “has evolved alongside the U.S. economic landscape,” moving from a manufacturing-based economy in the post-World War II era to a services-based one in the 1980s, and from the old economy to the new one.
The fund has a “long track record of protecting in periods of market volatility and market declines,” according to Patel. According to Lipper data, the five-star Morningstar-rated fund AIVSX is outperforming the S&P 500 both this year and across three- and five-year periods.
“Well-established U.S. companies with growth and income characteristics from a wide cross section of the economy” make up the majority of the portfolio, according to Patel.
According to Patel, the fund’s sweet spot of 80% invested in dividend payers provides evidence of capital discipline.
What about the rocky 2025 so far? “We’re looking to find long-term winners within the investment universe, within the U.S., so this is just noise at the moment,” Patel, who suggests that customers “stay invested, don’t try to time the market, take a very long-term perspective.”
Given how the post-COVID air travel rebound has increased demand for planes, the fund is overweight industrials with a focus on commercial aviation and aircraft-engine producer GE Aerospace (GE).
“Leading aircraft manufacturers cannot fill that gap, so there’s a slowdown in manufacturing of these new aircrafts, and the demand for aircraft is so high, so there’s a big gap,” she stated.
“They’re benefiting from strong aftermarket revenues, because the aircraft manufacturers are just not manufacturing the planes quick enough, and that adds resilience to GE’s revenues, because those aftermarket revenues are recurring” – and, according to Patel, resilient.
The fund is also interested in companies in the building products sector, such as Carrier Global (CARR). “They incorporate technology within their [heating, ventilation and air conditioning] systems to make them energy-efficient, so they’re going to benefit from the shift toward decarbonization, and also because about 40% of a building’s greenhouse-gas emissions come from HVAC systems,” she stated.
One of the fund’s longest holdings, Abbott Laboratories (ABT), is a diagnostic and medical technology business that is “exposed to the fastest-growing segments within healthcare, which is diabetes and heart valves,” according to Patel. Abbott hasn’t reduced its dividend in fifty years.
“So there’s all this technology, and the markets are just not reflecting the full potential of innovation that’s going on with the sector,” she explained.
Microsoft (MSFT), which the fund has owned since 1993, is its largest position. When she and her coworkers met CEO Satya Nadella 10 years ago following the change in leadership, she said they were pleased by the “direction of the growth potential of the company.”
And if you look at the company now, it’s a leader in cloud computing, software, and, thanks to its cooperation with OpenAI, artificial intelligence. According to her, the company has a solid competitive position, a diversified revenue mix, a recurring subscription model with its cloud computing and Office 365 products, and has raised dividends for the past 20 years.
In terms of exposure to AI, the fund is “very selective,” although she claims that Carrier Global is a play on the materials that large AI data centers would require for their construction, while Microsoft provides a path in through its OpenAI link.
Uber (UBER), which was acquired in 2023, is a relative newbie to the fund. Patel and his team favor Uber because it links drivers and passengers, while they are less interested in Tesla because of its “very capital-intensive” business.
“To break even and make a profit you need to utilize or increase the utilization rate of these driverless cars,” and offering them on the largest marketplace, like Uber, is the best way to achieve that.
According to her, managers see greater chances elsewhere and Tesla (TSLA) is a “very, very small position” in the fund due to its volatility.
According to Patel, many investors might not be aware that the market is expanding the SPX. “There are a number of sectors and industries that are doing much better than tech,” she stated.
