American Funds to Offer New Share Class

American Funds, seeking to tap investors’ increasing reliance on financial planners, will offer a new class of shares that carry no sales charge but can be bought only through professional financial advisors.

Los Angeles-based American, the No. 3 U.S. mutual fund company with more than $300 billion in assets, will begin offering Class F shares in March. The shares can be bought without sales charge by financial planners who use fund supermarkets such as Charles Schwab to craft portfolios for clients.

“The F shares reflect the growth of fee-based business,” according to John Lawrence, a spokesman for Capital Research and Management Co., parent of American Funds.

The move is an about-face for American, which until last year sold only Class A shares that carry an upfront sales charge. The firm has historically relied on brokers to sell its funds.

Last March, the company began offering Class B shares, which have a deferred sales charge. Currently, the firm’s only no-load fund sales have been to retirement plans and high-net-worth clients.

“Fund families are realizing that the mutual fund landscape is so competitive that they need to have as many possible levels of distribution as they can,” said Whitney Dow, analyst at Financial Research in Boston.

Five American funds are among the 20 biggest U.S. mutual funds: Income Fund of America, Investment Company of America, Washington Mutual Investors, New Perspective and EuroPacific Growth. With their value-oriented investment style, the funds performed well last year compared with the broader stock market. Income Fund, for instance, was up 10% last year; Washington Mutual gained 9.1%

Even so, American Funds saw the amount of new cash flowing into its funds fall to a net $3.5 billion in the 11 months through November 2000, from $7.2 billion in the same period a year earlier, according to FRC.