We aim to control the downside risk in each investment we make and to produce a compelling risk-adjusted compound rate of return over time. We believe that we can generate higher compound returns for investors by taking less risk.
This investment philosophy has guided our research intensive process since the American Fund’s launch in 1998 and manifests itself in a comprehensive list of questions that we ask ourselves about every company that we invest in.
We invest in businesses that generate strong free cash flows and management teams that are effective allocators of capital. We back companies that deliver value for their customers through great products and services. We look to support corporate cultures that create an environment for employees to flourish and grow.
Before we make an investment we need to have a high degree of confidence in the terminal value of the business and an awareness of the risk of permanent capital impairment if we are wrong about our assumptions.