Unlike a passive ETF that tends to have more quarter to quarter consistency in its holdings and allocations, changes at active mutual funds should be expected. As such, S&P Global Market Intelligence thinks looking at the stakes at a large asset manager such as Capital Research and Management can provide interesting data points that could lead to investment decisions.
According to the Capital IQ database and using the December 31, 2015 13-F filing, American Funds increased the stake in half of its 20 largest equity positions, while reducing the share count of the remainder. Overall, consumer discretionary companies were the most widely held. This, despite the 7.0% reduction in the number of shares the firm held in Amazon.com (AMZN); the share count was also cut during the third quarter.
Other larger share count reductions were for Alphabet (GOOGL) and Altria (MO), which experienced 18% and 8% declines, respectively.
Meanwhile, American Funds managers increased the share count of Philip Morris International (PM) by 3.3% during the fourth quarter. PM is now the third largest position for the firm, behind AMZN and Microsoft (MSFT); MSFT share count was 0.5% higher than it was in the third quarter.
Other top-20 positions that were added to during the quarter included Comcast (CMCSA), Coca-Cola (KO), JP Morgan (JPM) and United Health Group (UNH). Unlike other top positions, exposure to CMCSA was reduced in the third quarter.
Not surprisingly these positions are held in a meaningful way in some of the largest American Funds offerings. For example, American Funds Growth Fund of America (AGTHX) has top-10 positions in AMZN, GOOGL, MSFT and UNH.AGHTX has generated a moderately below-average three-year total return, but has lower volatility, helping it generate a 0.95 Sharpe ratio (0.94 for large-cap growth peers). The mutual fund earns positive ranking inputs in S&P Global Market Intelligence’s proprietary methodology for its risk considerations, in part for the long tenure of management.