Smooth-Ride Investments: The Home Depot, Inc. (HD), Amgen, Inc. (AMGN), Johnson & Johnson (JNJ)

Smooth rider
Another fund that offers a relatively bump-free ride is American Funds American Mutual (AMRMX). Just keep in mind that this fund charges a front-end load, so only purchase it if you can do so without paying this fee, probably in an employer-sponsored retirement plan such as a 401(k). This fund is split up into several “sleeves,” with a different manager running each portion. The focus here is on financially stable, industry-leading companies with a solid history of making dividend payments. As with Vanguard Dividend Growth, such an approach lends itself to a more stable portfolio, devoid of wide price swings. American Mutual’s 10-year standard deviation is just 12.1, indicating a relatively steady ride, at least compared with its peers.

Top holdings in the portfolio include Amgen, Inc. (NASDAQ:AMGN) , which fund management believes has matured into a first-rate biotech with a demonstrated commitment to growing its dividend. Likewise, retailer The Home Depot, Inc. (NYSE:HD) has benefited from the rebound in the domestic housing market and should continue to see increased profit margins from a recent inventory management system overhaul. With more than $25 billion in net assets, this fund is a hefty one, but its focus on the larger end of the market cap spectrum means it shouldn’t be boxed in by its asset load.

While low-volatility funds like these can help smooth out your portfolio’s trajectory over time, investors should be aware that these investments are not a sure thing. Low volatility doesn’t mean you’re guaranteed against losses. And keep in mind that low-volatility investing can be decidedly out-of-favor when the market takes off. In fact, while the two actively managed funds I’ve mentioned have excellent long-term track records, both have been trailing more recently as investors have taken a more “risk-on” view of the market. So, as with any investment approach, make sure funds like these are part of a wider, well-diversified portfolio with a long-term outlook.

The article Smooth-Ride Investments originally appeared on Fool.com and is written by Amanda B. Kish.

Amanda Kish is the Fool’s resident fund advisor for the Rule Your Retirement investment newsletter service. Amanda has no position in any stocks mentioned. The Motley Fool recommends Home Depot and Johnson & Johnson and owns shares of Johnson & Johnson and Microsoft.

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