Capital Group has issued a bold press release claiming its American Funds suite outperformed benchmarks, with 91% of equity strategies beating their targets gross of fees. The Los Angeles-based asset manager, recently named Barron's best fund family of 2025, touted its long-term track record and investor-friendly structure. However, Alphaville's analysis of $888 billion in assets under management tells a different story.

A decade-long comparison reveals that Capital's five largest equity mutual funds - including the $336 billion Growth Fund of America - underperformed both the Nasdaq-tracking QQQ ETF and Vanguard's S&P 500 index fund. While Capital's funds have advantages like stable teams and rare launches, their net asset values lagged passive alternatives. The firm argues benchmark selection matters, noting its New Perspective Fund tracks the MSCI All Country World Index rather than US indices.

This debate highlights the ongoing struggle between active and passive management. Despite Capital's reputation as one of the better active managers, even their well-run funds couldn't overcome the persistent challenge of beating broad market indices over extended periods. The data reinforces that for most investors, the cheapest and broadest passive funds remain the optimal choice.