The number two fund family, behind Vanguard, boasts some superb funds. But others haven’t done so well in recent years.

Once upon a time, you could throw a dart at a list of the American funds, and you were almost certain to hit a bull’s-eye. During the 2000-02 bear market, in particular, the American funds gained a reputation as unsinkable.

SEE ALSO: 9 Rules for Picking Mutual Funds

American’s inability to sidestep the 2007-09 inferno shocked many investors, who had been assured by their advisers that the funds would protect them in downturns (American funds are sold only through third parties). The funds were put out there as failsafe investments, says Kevin McDevitt, who covers the fund family for Morningstar.

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Nearly three years since the bear market ended in March 2009, some of the American funds have regained their sparkle. But others are still struggling. Overall, the funds’ performance last year, while decent, was nothing to write home about. The average American fund, calculates Morningstar, finished in the top 39% of its peer group. Over the past three years, the average American fund ranked in the 43rd percentile, and over the past five years, they were in the 46th percentile — that is, a bit better than average. So performance is getting better, but it’s still nowhere near as strong as it was in the old days.

That said, the American funds remain special, in my view. For starters, American’s fees are as low as they come for actively managed funds. Beyond that, the parent firm, Los Angeles-based Capital Research and Management, boasts 227 analysts and portfolio counselors who are a product of an investment culture that emphasizes long-term returns. Each counselor manages a portion of one or more funds. A manager’s compensation is based on how his or her picks do over four- and eight-year periods. Research analysts also manage a portion of each fund.

In the latter part of the last decade, when a cascade of new money threatened the firm with asset bloat, American funds split its investment arm into two halves — each with exactly the same mission. It established two separate trading desks, and generally prohibited analysts and portfolio counselors on one team from talking stocks with those on the other. It was — and remains — an expensive undertaking, but one whose dividends will likely be realized for years to come. You get more give and take and better ideas from smaller groups, says Chuck Freadhoff, a spokesman for the funds.

My favorite American fund and one of my two top picks among load funds is Washington Mutual (symbol WMFFX ). The fund invests almost exclusively in large, high-quality, dividend-paying U.S. companies. The expense ratio for the fund’s F-2 shares (the class you should always ask your adviser to buy for you) is a mere 0.41%.

Capital Research opened its first foreign office in 1962. Because of the firm’s long experience investing overseas, I tend to favor American funds that focus on foreign stocks. One is New World (NFFFX ). another of my favorite load funds. The fund owns a slug of emerging markets bonds and invests roughly half of the remaining assets in emerging markets stocks and the rest in multinationals that are doing lots of business in emerging markets. Its F2 shares cost just 0.76% a year.

Other fine choices are Capital Income Builder F-2 (CAIFX ) and EuroPacific Growth F-2 (AEPFX ). The former invests in stocks and bonds around the world, yields 3.8% and charges 0.41% annually. The latter, which charges just 0.59% annually, invests only in foreign stocks.

But I think you should look elsewhere for small-company funds. American offers only one, Smallcap World (SMCFX ), and it hasn’t performed especially well. Funds that invest in small-capitalization stocks tend to do better with small asset bases. In addition, American’s high-yield bond funds haven’t done well in recent years.

Less-than-stellar performance in recent years has led to an outflow of assets that I think is overdone. Since their peak, the American funds have shrunk by 29%, to $854 billion, mostly because of an exodus by investors (American remains the largest provider of adviser-sold open-end mutual funds and is second overall, behind only Vanguard). The exodus, strangely, has actually accelerated since the end of the bear market. Growth Fund of America, once the nation’s largest fund, lost $33 billion in assets last year — more than any other fund family.

McDevitt says the redemptions haven’t hurt morale at the American funds. Traditionally, it has been rare for people to leave the American funds to go elsewhere. That hasn’t changed. Things are fine on the investment side, McDevitt says. Investors should take heed.

See page 2 for Steve Goldberg’s earlier take on American funds during the Great Recession.