Fundsters interested in the advisor-sold side of the business, particularly those pondering how to deal with the media, may want to
take heed of the hubbub over a recent article in Barron
Saturday Michael Shari, in the pub's cover article, offered
a glimpse of the recent trials and tribulations of
's gigantic American Funds
], including rare
comments from several top Capital Group execs. Now a trade pub sees
controversy stirred up over that article.
' Jessica Toonkel reports
that advisors are reacting strongly to quotes in the
Barron's article from American Funds Distributors president Kevin
, who seemingly blamed advisors for American Funds'
recent massive outflows ($50 billion in 2010 and $14.79 billion so far in
2011, according to Morningstar), claiming that advisors had been
"foolish" after the dot-com crash in marketing American's offerings
as "able to defy gravity."
Capital Group spokesman Chuck Freadhoff told InvestmentNews that "Clifford
absolutely did not blame advisers."
"I am not saying that the reporter misquoted him, but there was a
miscommunication," Freadhoff reportedly said, adding that the fund
giant has already reached out to its wholesalers regarding the
hubbub. "We have provided them with the full context of what Kevin
said and prepared them to answer any questions."
, director of research at Morningstar
called Clifford's comments "rather foolish" and "just jaw dropping".
And advisors InvestmentNews interviewed turned the blame back around to
"Advisers were overselling the funds because they [American Funds'
team] were over-marketing them," opined Steve Johnson
Raymond James advisor. "Their wholesalers were out there beating you
up on how cheap their funds were and how consistent the track records
Fundsters interested in Capital Group may want to take a look at the
full Barron's article, which offers commentary from several
executives from a fund giant that is notoriously shy about granting
interviews. Those who spoke to Barron's include Capital Research and
Management executive committee chairman Jim Rothenberg
well as Robert Lovelace
(grandson of founder Jonathan
Lovelace), Capital Research and Management president Tim
, Casey, Quirk and Associates
and several advisors. Rothenberg admits that it's been a
rough couple of years for the quiet giant.
"We disappointed people in the downturn in 2008-09, after we had done
so very well in 2000-02," Rothenberg told Barron's. "We had all the
raw ingredients, but somehow the chef messed up the soup."
Neil Anderson, Managing Editor
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