While digging into the municipal bond market last week, an insurance broker I spoke to suggested that I look into American Funds as a way to get exposure to the muni market. He was a big fan of the fund family and offered the view of a fellow broker who recommends American Funds products because: "I've never had to apologize for them."

In an industry that's often criticized for mediocrity -- as many investment managers fail to beat their benchmarks -- that's a pretty bold statement. But it's a statement that's backed by some pretty impressive performance. The company's Investment Company of America growth-and-income fund has managed to produce more than 12% per year going all the way back to 1934. As my fellow fool Amanda Kish pointed out this month, that amounts to a total return near 700,000%.

While investors can, of course, invest in American's funds, there have been concerns in recent years that the fund family's size -- as of late last year, it managed more than $1 trillion -- will hurt returns. However, perhaps there are a few things that we Foolish do-it-yourselfers can learn from American's success.

Incentives matter
Last year, SmartMoney reported on an interesting study that showed that funds with managers that had a good chunk of their own money invested in the fund performed better than managers that had little or no stake in the fund. SmartMoney pointed out that on average American Funds' managers had more than $600,000 invested in the funds they ran. That was only topped by Dodge & Cox, where the average manager had an $860,000 stake.

But it doesn't stop there. Unlike competitors like T. Rowe Price (Nasdaq: TROW) and Legg Mason (NYSE: LM), Capital International, American Funds' advisor, is privately held and roughly 85% owned by active employees. In addition, American Funds advisors aren't encouraged to take big risks to score a big year-end bonus -- their performance-related compensation is heavily based on four- and eight-year rolling averages.

The point is that American Funds has cranked up the stake that insiders have in the performance of both the funds and the company while reducing its need to strive for short-term targets that may hurt long-term performance.

As investors, we get a two-for-one in take-home lessons from this. First, we'll do better as investors if we take a longer-term focus. The 24-hour news cycle and the big Wall Street investment houses have a warped sense of "long term" that can often seem as short as a couple months but is rarely longer than a year. By practicing time arbitrage, we can take advantage of their myopia.

Along with that, we'll be well-served by seeking out companies where management teams either own a significant stake in the business or are at least compensated in a way that encourages them to focus on the long term. Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) is a prime example of this. Chairman and CEO Warren Buffett has a near-$50 billion stake in the company and therefore has a very big incentive to manage for long-term success. Interestingly, in his most recent letter to shareholders, Buffett cited the incentives of individual Berkshire-company managers as a huge advantage for the company.

This latter idea is nothing new to Fool co-founder Tom Gardner. He's long been an advocate of finding great companies by looking at insiders' ownership position. This focus has helped lead him to market-crushing stocks like Dolby Laboratories at The Motley Fool's Stock Advisor newsletter.

Valuation matters
It's quite simple really. The price you pay for a stock matters, and if you ignore valuation and pay too much, you'll end up disappointed.

Valuation is a central part of the American Funds mantra. On its website, the company leads its pitch by referring to itself as having "a long-term, value-oriented approach." Getting more specific, the company says:

We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. ... We do the thorough research necessary to determine the actual worth of an organization. Instead of asking, "Where will this security be in three to six months?" we prefer to ask, "Where will this company or issuer be in five to 10 years?"

The company's adherence to value principles dates all the way back to its founder Jonathan Bell Lovelace who, in 1929, sold his stake in the brokerage he was involved with and liquidated most of his personal stock holdings because he thought stocks' prices and values had gotten out of whack and couldn't convince his associates of the same. More recently, the fund family avoided major losses from both the Enron implosion and the Internet bubble because it stuck to its value guns.

However, the lesson here isn't necessarily a simple focus on price-to-earnings ratios. After all, the Growth Fund of America owns significant stakes in Google (Nasdaq: GOOG) and Qualcomm (Nasdaq: QCOM), which have trailing P/Es of 23 and 27, respectively. As noted above, the key is finding "reasonable prices relative to their prospects."

Perspectives matter
Instead of having a single portfolio manager or team of managers for its funds, American Funds has a system that puts several managers in silos to each manage a portion of the fund. As the company rhetorically asks: "Which would you prefer: a mutual fund that represents the top 30 to 40 investment ideas of several managers or one manager's top 200 ideas?"

By the nature of it, being an individual investor makes this strategy a bit difficult to follow. Assuming you don't have multiple personalities, your best bet to emulate this aspect of American Funds' approach is to make sure to expose yourself to plenty of other perspectives.

While there are many ways to do this, one great one is to check out Motley Fool CAPS. The CAPS community is a collection of 170,000 stock pickers who are sharing their thoughts on thousands of stocks. As such it's a great place to find ideas and to challenge your own. Wal-Mart (NYSE: WMT), for instance, is a favorite of mine right now, but on CAPS I can find a range of bearish views on the company that include concerns about inflation, the company's image, and falling U.S. sales.

And what's even better is that CAPS is 100% free, so you can share your views and benefit from other investors' insights right now.

Berkshire Hathaway, Google, and Wal-Mart Stores are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers selection. Berkshire Hathaway and Dolby Laboratories are Motley Fool Stock Advisor recommendations. Wal-Mart Stores is aMotley Fool Global Gains pick. Motley Fool Options has recommended a diagonal call position on Wal-Mart Stores. The Fool owns shares of Berkshire Hathaway, Google, Legg Mason, Qualcomm, T. Rowe Price Group, and Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Wal-Mart and Berkshire Hathaway, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.