Key Morningstar Metrics for American Funds New World
- Morningstar Medalist Rating: Gold
- Process Pillar: Above Average
- People Pillar: High
- Parent Pillar: High
American Funds New World (which includes the Capital Group New World Luxembourg, Australia, and Japan vehicles) benefits from veteran leaders with unrivaled support and a risk-averse approach, making it a solid choice for investors.
This fund benefits from experienced managers and a large, globally based analyst team. In total, 12 named managers split the asset base, with varying investment approaches and mandates. Eleven managers focus on equities, and one manages the fund’s tiny fixed-income sleeve. All managers have more than 15 years of investment experience with the firm. In total, four of the firm’s subsidiaries support the fund, with more than 200 analysts at the managers’ disposal.
The managers’ success stems from the fund’s flexible, risk-averse approach. In addition to emerging-market companies, the managers can invest a share of the portfolio in developed-market firms that derive at least a fifth of their revenue from emerging economies to achieve a less volatile portfolio than the typical peer. This flexibility affords the managers a larger opportunity set than most emerging-market strategies. For example, its top 10 holdings include US technology giant Microsoft and European aerospace multinational Airbus, among more typical emerging-market companies like Tencent. At the start of 2025, the managers increased the minimum amount of assets that are invested directly in emerging-market-domiciled securities to 45% from 35% (though they now include Taiwan and South Korea).
This unique approach leads to a portfolio that stands out among its peers and the MSCI Emerging Markets Index. As of March 2025, the fund’s 16.8% US equity allocation is one of the highest in its Morningstar Category, though it has come down slightly since the emerging-market allocation change this year. It has lower volatility (as measured by standard deviation) than the index and typical peer, helping contribute to superior downside protection, but the attributes have also provided some propulsion in market rallies. This has resulted in consistent long-term results: The fund has landed in the top 15% of the category over the trailing 10-, 15-, and 20-year periods ended July 2025.
It remains a solid option for broad emerging-market exposure.
American Funds New World: Performance Highlights
The fund has produced strong long-term results. Over the trailing 10-, 15-, and 20-year periods ended July 2025, the R6 shares’ annualized return topped those of the MSCI Emerging Markets Index and landed in the top 15% of the diversified emerging-markets category. The fund fares even better on a risk-adjusted basis, thanks to muted volatility and superior downside protection.
The fund can, however, lag in emerging-markets rallies thanks to its broad geographic exposure, which includes a large allocation to developed markets. That was evident in the mostly uninterrupted emerging-market bull market that began in the early 2000s and lasted until the 2007-09 global financial crisis. As emerging markets have fared better than the US in 2025’s first seven months, the fund has lagged the benchmark.
Investors who stuck with the fund through bouts of underperformance have done well, as the fund has typically outperformed in downturns. The R6 shares’ five-year downside-capture ratio shows it has lost just 79% of the amount relative to the MSCI Emerging Markets Index.
The fund typically is more growth-oriented than the benchmark, which has helped it perform well in broad market rallies. In 2023, the fund handily outpaced the index, with picks across most sectors helping, such as healthcare firm Novo Nordisk, Brazilian e-commerce firm MercadoLibre, and US technology giant Microsoft.