You've probably seen the ticker NEWFX pop up if you’re looking at a 401(k) menu or talking to a traditional financial advisor. It’s the New World Fund A, part of the massive American Funds family from Capital Group. But here is the thing: most people categorize it as a "Developing Markets" fund and move on.
That is a mistake.
Honestly, calling this a pure emerging markets fund is kinda like calling a smartphone just a "telephone." It does way more, and the way it’s built is actually pretty unique in the mutual fund world. If you’re trying to figure out if that 5.75% front-end load is worth it, or why your returns don't perfectly track the MSCI Emerging Markets Index, you need to look at the "secret sauce" in how they pick stocks.
The Strategy: It’s Not Just Where a Company Lives
Most emerging market funds buy companies based on where their headquarters are located. If the office is in São Paulo or Shanghai, it’s in the fund. New World Fund A doesn't play that way.
They use what they call a "flexible" approach. Basically, they care about where a company makes its money, not just where it receives its mail.
This means the fund can own a giant US-based company like Microsoft or Broadcom as long as that company has massive exposure to developing economies. Think about it. If a huge portion of a tech giant's future growth is coming from India or Brazil, isn't that an emerging markets play? Capital Group thinks so. As of early 2026, the fund still holds roughly 17% in U.S. equities, which is a huge departure from your standard EM fund.
It’s about capturing the growth of the "New World" without necessarily having to deal with the sketchy governance of a tiny, mid-cap firm in a frontier market.
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What’s Inside? Breaking Down NEWFX Holdings
If you peek under the hood, the top of the list looks somewhat familiar, but the weightings are specific. As of the most recent 2026 data, Taiwan Semiconductor Manufacturing Co (TSMC) is the heavyweight, often sitting around 7% to 8% of the total assets.
Other big names you’ll find:
- Tencent Holdings: The Chinese social media and gaming giant.
- SK Hynix: A massive player in the global memory chip market based in South Korea.
- MercadoLibre: Often called the "Amazon of Latin America."
- Airbus: Even this European aerospace giant makes the cut because of its massive order books in developing regions.
By mixing these with companies like Nu Holdings (a digital banking disrupter in Brazil), the fund tries to give you a smoother ride. The goal is to get those emerging market returns but with "developed market-like volatility."
The Elephant in the Room: Fees and Loads
We have to talk about the cost. New World Fund A is a "load" fund.
If you buy this through a broker, you might get hit with that 5.75% maximum sales charge. That hurts. If you put in $10,000, only $9,425 actually goes to work for you on day one.
However, many investors get these fees waived if they have a large enough account (usually over $1 million with American Funds) or if they buy through an employer-sponsored retirement plan. The ongoing expense ratio is about 0.96% to 0.98%. For an actively managed fund that scouts companies across sixty different countries, that’s actually pretty competitive. It’s definitely cheaper than some of the "boutique" emerging market funds that charge 1.5% or more.
Performance Reality Check
How has it actually done?
For the year ending December 31, 2025, the fund put up a massive 28.10% return at NAV (Net Asset Value). But remember, if you paid that 5.75% load, your "real" return was closer to 20.73%.
Over the long haul—we're talking 10 years—it’s averaged about 9.48% annually.
Is it beating the benchmark? It depends on which one you use. It often lags the S&P 500 (because the US has been on a tear), but it frequently outperforms the MSCI Emerging Markets Index during downturns because those US and European "multinationals" act as a cushion when things get rocky in Beijing or Istanbul.
Why Investors Get Confused by the "A" Share Class
Mutual funds have a weird alphabet soup of share classes. Class A (NEWFX) is the one with the upfront commission. If you see Class C (NEWCX), that usually has no upfront fee but much higher annual expenses. Then there’s Class R-6 (RNWGX), which is the "holy grail" for retirement plans because it has no loads and the lowest internal fees.
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If you’re a DIY investor using a platform like Robinhood or E*TRADE, you might wonder why you’d ever pay a load. Truthfully, you probably shouldn't. Most people end up in the A-shares because they are working with a human advisor who is getting paid for their time and research via that commission.
The 2026 Outlook and Risks
Investing in the New World Fund A isn't a "set it and forget it" move without risks.
First, there is the China factor. The fund has significant exposure to China (around 14-20% depending on the month). If trade wars heat up or the Chinese property market takes another dive, this fund will feel it.
Second, there is the Currency risk. Since the fund owns stocks priced in Yuan, Real, and Won, a super-strong US Dollar can eat into your gains. Even if the stocks go up, if the local currency drops against the dollar, your return shrinks.
Actionable Steps for Your Portfolio
If you’re considering adding New World Fund A to your holdings, don’t just click "buy." Follow these steps to see if it actually fits your specific financial situation:
- Check Your Retirement Plan: Before buying A-shares in a taxable account, look at your 401(k). You might have access to the R-6 version (RNWGX), which is the exact same portfolio but without the sales load and with lower fees.
- Evaluate Your "Home Bias": If your portfolio is already 90% US stocks (Apple, Nvidia, etc.), this fund is a great diversifier. But if you already own a lot of "International" funds, check for overlap. You might find you already own a lot of TSMC and Tencent elsewhere.
- Negotiate the Load: If you are working with an advisor and moving a significant amount of money (over $25,000 or $50,000), ask about "breakpoints." The sales charge drops as you invest more.
- Look at the Yield: This isn't just a growth play. The fund paid a dividend of roughly $5.32 per share in late 2025. If you're looking for a mix of growth and some occasional income, it’s a solid hybrid.
- Watch the Benchmarks: Starting in 2026, the fund is shifting its primary focus to more closely track the MSCI Emerging Markets index. Keep an eye on the quarterly reports to see if the managers start selling off those "cushion" US stocks like Microsoft, as that would change the risk profile of the fund significantly.