American Funds New World (NWFFX)

I've traveled to some interesting places in my life, such as Pakistan, Thailand, Ukraine, Russia. The cultures and languages are all fascinating. There are all kinds of people with so many different values and priorities. And yet, as the global economy continues to grow, you can see that there is a powerful, creative ability in all people that generates some amazing results when set free to do so.

American Funds New World is a go-anywhere fund that focuses on stocks relating to growth in emerging markets, such as Latin America, China, and India. The fund doesn't just buy emerging markets though. It buys global companies (including some in the US) that are integrally connected to growth happening in emerging markets.

American Funds is a very interesting fund family. Most of their funds cross asset class categories, and that seems to be where the results are best for actively managed funds. That is, most of their funds have broad investment mandates that allow them to shop all over the world to find the stocks that best represent their portfolio needs. They then hold those stocks for a fairly long time.

Over the last 18 years, New World has returned 8.26% per year since its inception in July of 1999. That is about .5% per year better than Vanguard Emerging Markets index with less volatility. Speaking of volatility, emerging markets stocks are more volatile than other classes of stocks, so prepare yourself for a ride.

I like the fact that American Funds uses a team management approach while retaining individual flexibility for their managers. Practically all their broad-mandate funds have had outstanding results. American Funds class F-1 are now available for retail investors on several brokerage platforms, including Fidelity and Schwab. The cheaper F-2 class is available through advisors as well as their front-end load funds.

International stocks have underperformed the US over the last few years. It is probably time to check your allocation now to make sure you have adequate international exposure. As with any investment, understand the risks before you buy!