Samir Mathur

Title: Solutions Portfolio Manager and Chair of Portfolio Solutions Committee

Years with present firm: 7 years

Year in financial services: 27 years

Investment/Asset class focus: Development of fund-of-fund solutions

Asset Management Firm: Capital Group

Firm’s headquarters: Los Angeles; 29 offices worldwide

Year firm was founded: 1931

Number of employees/partners: 7,000-plus associates/400 partners

AUM/advisement as of March 31, 2020: $1.7 trillion

The American Funds Core Models rose to the top of a field with over 130 third-party strategist managers offering diversified products. The group’s consistent long-term performance and its 2019 results also impressed Envestnet analysts.

“The Capital Group has been a leader in embracing the use of financial advisors and providing long-term, low-cost, actively managed solutions that help the advisor’s clients reach their goals,” the analysts explained. “Its fundamental, bottom-up global research effort, along with their size and scale, and multi- manager approach distinguishes them from other strategist managers.”

With assets of $12.3 billion, American Funds Core Models include growth, growth and income, preservation and income solutions, and its models choose from 20-30 underlying mutual funds across different objectives. These funds’ multi-manager system “is a key differentiator that allows for various investment styles within a single portfolio to enhance diversification, minimizes key-man risk and helps to recruit and develop new talent,” according to Envestnet.

The long-term track records of the underlying American Funds Mutual Funds also benefit from “empirical back testing to see how different combinations of funds have behaved over a variety of market conditions,” the analysts explained.

“Few firms have the depth and breadth within its investment teams to match the knowledge of the Capital Group,” they added. “Members of Portfolio Solutions Committee, who oversee the multi-asset strategies, have an overall average of about 30 years of experience, including roughly 20 years at the Capital Group.”

The Global Growth, Growth, Moderate Growth, Growth & Income, and Moderate Growth & Income portfolios, for instance, all ranked in the top 5% of their peer group for 2019 performance.

“An important thing to keep in mind is that the way we invest is different from most other asset managers,” said Solutions Portfolio Manager Samir Mathur, who also is the chair of American Funds’ Portfolio Solutions Committee. “First of all, we do not use a style system. Instead we use a multi-manager system that divides the portfolio into segments, each run by an individual manager.”

As a result, the portfolios represent “a diverse collection of investment ideas, not just one manager’s perspective,” Mathur explained. “These different approaches and perspectives also create the potential for portfolios to fare well in a variety of market conditions, providing a smoother ride for investors.”

In the first quarter of 2020, seven out of eight portfolios ended the quarter in the top half of their respective Morningstar categories. “These portfolios are managed strategically. While we constantly monitor them, we don’t make quarterly allocation changes based on top-down views like some competitors do,” the New York-based portfolio manager said.

Overall, the group has a higher allocation to dividend-focused equities than some peers. “In addition to providing income, these equities can help improve the risk adjusted returns and add a volatility-damping effect over the long term,” according to Mathur.

While 2020 “certainly has been an unprecedented market environment, our underlying fund managers are staying focused on the fundamentals of the market and finding great investment opportunities around the world,” the portfolio manager said.

“Our investment group has a very strategic mindset. We do not go after every trend out there or run after everything,” he added. “Sometimes, there’s so much noise out there that people cannot make out what the right signals are.” Janet Levaux