Q. My financial adviser has me in American Funds Growth Fund of America. Is this still a good investment?
More Top Picks Best Solar Watches For Men
–K.T., via the Internet
A. This diversified fund has grown larger than the former planet Pluto.
It wouldn’t have grown rapidly to become the largest mutual fund, with $143 billion in assets, if it didn’t have something going for it. Performance has been hard to beat and many financial advisers understandably recommend it to clients.
Through Monday, American Funds Growth Fund of America (AGTHX) had a 12-month total return of 6 percent, three-year annualized return of 12 percent and a five-year annualized return of 8 percent. All rank within the top 10 percent of large growth funds.
The fund’s parent, American Funds, maintains that its investment management systems are designed to handle enormous assets, but it is nonetheless a consideration.
“I’m lukewarm on this fund because its size may get in the way of the investment process, though I wouldn’t sell it if I already owned it,” said Paul Herbert, analyst with Morningstar Inc. “Although the fund’s stakes in energy and foreign stocks have helped it the past few years, it would face headwinds if they slow down.”
Not only is this the nation’s largest fund, but the American Funds family has become the largest fund firm, with $864 billion in assets.
Although lead manager Don O’Neal has been this fund’s overseer since 1994, eight other managers each do his or her own thing with a portion of portfolio. They invest in a mix of growth stocks, turnaround situations and cyclical names across a range of industries.
Energy, health care, technology hardware and consumer services are its largest groups. Top holdings recently were Google, Roche Holding, Schlumberger, Lowe’s and Oracle.
This 5.75 percent “load” fund requires a $250 minimum investment and has an annual expense ratio of 0.66 percent.
Q. I am single and have student loans and some credit card debt. I recently bought a condominium and a car. What interest that I’m paying is deductible?
–W.G., via the Internet
A. All interest is not alike in the eyes of the tax man:
– Mortgage interest on your condo is deductible if you itemize, up to a limit of $1 million a year or $500,000 if you are married filing separately.
– You can claim an itemized deduction for interest on home-equity loans totaling up to $100,000.
– Up to $2,500 of your student loan interest is deductible for single filers with incomes below $50,000 and married joint filers with incomes below $105,000. Deductibility then phases out gradually.
“Interest on your car won’t be deductible unless you use the car for business, and then only if you’re self-employed,” said Maggie Doedtman, manager of tax training for H&R Block in Kansas City, Mo.
Credit card interest also can be deductible if you’re self-employed and using the card for business purposes, Doedtman said.
———-
Andrew Leckey is a Tribune Media Services columnist. E-mail him at [email protected].
More Top Picks Canon Imageformula R10