There is once again a new fund on the top of the heap displacing Fidelity Magellan. In fact, there are three. A trio of American Funds offerings recently displaced the Fidelity fund as the nation's largest mutual fund.

In the past four years Magellan has been overtaken in size by a pair of funds, including Pimco's Total Return fund and Vanguard's Index 500 fund, only to retake the title soon thereafter.

This time the trio surpassing it include: American Funds Growth Fund of America with $74.96 billion in assets, The Investment Company of America with $68.93 billion and Washington Mutual Investors Fund with $66.92 billion. Fidelity’s Magellan is close behind at $66.87 billion in assets as of the end of March.

American’s broker-distributed funds are known for their low cost and consistent returns. The growth may also have been boosted by the firm's successful run in the retirement market with its R-share class. Overall, the share class has attracted $11.4 billion, with American Funds capturing $7.6 billion, estimated a retirement analyst in an August 2003 Forbes article.

Altogether, the 29-fund family’s investments exceed $450 billion.

American Funds’ parent company, Capital Research and Management, serves as investment advisor to the funds.

In many ways, American Funds strategy differs markedly from that of Fidelity. The Los Angeles- based fund complex sells exclusively through brokers and shuns advertising and retail marketing. Indeed, relatively few retail investors have heard of the company.

Capital Research also avoids the creation of "star manager" by focusing on team portfolio management. The fund portfolios are parceled out to fund managers who invest the assets according to the specific fund’s objectives, billed a "multiple portfolio counselor" system.

R. Michael Shanahan, chairman of the board of Capital Research, and James F. Rothenberg, president and director, are among the counselors managing both the Growth Fund of America and The Investment Company of America Fund; Timothy D. Armour, executive vice president and director and James K. Dunton, executive vice president and director, are among the managers of the Washington Mutual Investors Fund.

The firm had no problem gaining distribution in 2003 - AIG SunAmerica added the funds in July 2003, and Nationwide Life and Hartford Financial in April 2003.

In keeping with the firm's "quiet" reputation, a spokeswoman at American Funds declined to comment about the firm’s inflows. 

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