# 25 World Stock

U.S. News evaluated 320 World Stock Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

Summary

Investors looking for both growth and income within their portfolio might consider the aptly named American Funds Capital World Growth and Income Fund. The fund looks for blue-chip stocks issued by companies in the world’s largest stock markets and also focuses on established companies that pay regular dividends.

As of February 04, 2015, the fund has assets totaling almost $86.15 billion invested in 408 different holdings. Its portfolio consists primarily of large, widely held stocks throughout the world. Industries represented in the fund include pharmaceuticals, banks, oil and gas, biotechnology and tobacco. In terms of individual stocks, the fund’s top five holdings are Novartis, Amgen, Gilead Sciences, Bayer and Altria.

The fund has consistently beaten its benchmark, the MSCI ACWI Ex U.S. index.

The fund is the largest in its category, and its sizable assets mean most of its investments are solidly in the large-cap arena. Its investments in big names that pay high dividends can hurt returns at times. (Investments in Europe from 2009 to 2011 hindered performance, for example.) But a more relaxed yield mandate at the fund means it now has more flexibility to target promising companies even if they don’t pay a dividend. The fund has returned 7.53 percent over the past year and 13.95 percent over the past three years. The fund has returned 10.27 percent over the past five years and 7.69 percent over the past decade.

Investment Strategy

With the flexibility to take advantage of opportunities throughout the world, the fund invests primarily in blue-chip stocks issued by companies in the world’s largest stock markets. The fund is conservatively managed and focuses on established firms that pay regular dividends.

Role in Portfolio

Morningstar says the fund plays a core role in an investment portfolio: The fund simply executes better than most. It excels at finding bargains hiding in plain sight, buying shares in leading firms at a discount, often when they’ve oversold due to near-term issues.

The fund is managed by Mark Denning, Jeanne Carroll, Sung Lee, L. Alfonso Barroso, David Riley, Joyce Gordon, Eric Richter and Harold La. The fund uses a multiple portfolio manager system, which is divided into segments and uses individual managers who decide how their respective segments will be invested.