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American Funds® Strategic Bond Fund

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DEFINED CONTRIBUTION FOCUS FUNDS

Active positioning with diversified core plus exposure

Resilience during equity-market declines

SBF has demonstrated resilience in equity corrections compared to strategies that had a greater focus on credit.

Cumulative returns (%) during equity market corrections since American Funds Strategic Bond Fund (R-6) inception (3/18/2016)

Bar chart compares excess return: Excess return over Core-Plus, 2.30; Excess return over Multisector, 3.47.

Source: Morningstar.
Data as of December 31, 2023, unless otherwise noted. Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower.
Dates shown for market corrections are based on price declines of 10% or more (without dividends reinvested) in the unmanaged S&P 500 with at least 75% recovery beginning April 23, 2010 through December 31, 2023. The returns are based on total returns. There have been periods when the fund has lagged the index, such as in rising equity markets.

Potentially lowering risk through duration

To exploit market opportunities as they develop, the fund actively manages the credit sectors in which it invests. By overweighting sectors with the potential to outperform and underweighting those less likely to deliver higher returns, it seeks to improve the potential for better investor outcomes.

Portfolio composition (%) on a quarterly basis

Chart illustrates the changing portfolio composition of American Funds Strategic Bond Fund between December 2020 and December 2023, tracking quarterly shifts in percentage allocations to the following sectors: Treasuries/rates/cash instruments, Treasury Inflation-Protected Securities, securitized debt, corporate issues, non-corporate credit, and extended sectors including high yield and emerging market debt. On December 31, 2020, Treasuries/rates/cash comprised 49% of the fund's investments. Treasury Inflation-Protected Securities comprised 6%, securitized instruments comprised 11%, corporate credit comprised 14%, non-corporate credit comprised 3% and extended sectors comprised 18%. On March 31, 2021, Treasuries/rates/cash comprised 35% of the fund's investments, Treasury Inflation-Protected Securities comprised 16%, securitized instruments comprised 4%, corporate credit comprised 17%, non-corporate credit comprised 3% and extended sectors comprised 26%. The fund reduced U.S. Treasuries, increased credit and mortgage exposure as spreads widened. On June 30, 2021, Treasuries/rates/cash comprised 31% of the fund's investments, Treasury Inflation-Protected Securities comprised 24%, securitized instruments comprised 5%. corporate credit comprised 16%, non-corporate credit comprised 2% and extended sectors comprised 21%. On September 30, 2021, Treasuries/rates/cash comprised 26% of the fund's investments, Treasury Inflation-Protected Securities comprised 18%, securitized instruments comprised 12%. corporate credit comprised 16%, non-corporate credit comprised 2% and extended sectors comprised 25%. On December 31, 2021, Treasuries/rates/cash comprised 26% of the fund's investments, Treasury Inflation- Protected Securities comprised 18%, securitized instruments comprised 10%, corporate credit comprised 19%, noncorporate credit comprised 3% and extended sectors comprised 25%. On March 31, 2022, Treasuries/rates/cash comprised 34% of the fund's investments, Treasury Inflation-Protected Securities comprised 15%, securitized instruments comprised 10%, corporate credit comprised 22%, non-corporate credit comprised 3% and extended sectors comprised 18%. On June 30, 2022, Treasuries/rates/cash comprised 21% of the fund's investments, Treasury Inflation-Protected Securities comprised 26%, securitized instruments comprised 15%, corporate credit comprised 20%, non-corporate credit comprised 3% and extended sectors comprised 16%. On September 30, 2022, Treasuries/rates/cash comprised 26% of the fund's investments. Treasury Inflation-Protected Securities comprised 17%, securitized instruments comprised 26%, corporate credit comprised 17%, non-corporate credit comprised 2% and extended sectors comprised 12%. On December 31, 2022, Treasuries/rates/cash comprised 28% of the fund's investments. Treasury Inflation-Protected Securities comprised 17%, securitized instruments comprised 25%, corporate credit comprised 17%, non-corporate credit comprised 2% and extended sectors comprised 12%. On March 31, 2023, Treasuries/rates/cash comprised 27% of the fund's investments, Treasury Inflation-Protected Securities comprised 14%, securitized instruments comprised 30%, corporate credit comprised 16%, non-corporate credit comprised 2% and extended sectors comprised 11%. The fund reduced credit risk given tightening monetary policy. On June 30, 2023, Treasuries/rates/cash comprised 20% of the fund's investments, Treasury Inflation-Protected Securities comprised 7%, securitized instruments comprised 41%, corporate credit comprised 16%, non-corporate credit comprised 2% and extended sectors comprised 14%. On September 30, 2023, Treasuries/rates/cash comprised 19% of the fund's investments, Treasury Inflation-Protected Securities comprised 4%, securitized instruments comprised 41%, corporate credit comprised 17%, non-corporate credit comprised 4% and extended sectors comprised 14%. On December 31, 2023, Treasuries/rates/cash comprised 22% of the fund's investments, Treasury Inflation-Protected Securities comprised 3%, securitized instruments comprised 39%, corporate credit comprised 19%, non-corporate credit comprised 3% and extended sectors comprised 14%.

Source: Capital Group. As of 12/31/2023. Green shades indicate sectors that have typically been highly liquid.

* Cash and equivalents includes short-term securities, accrued income and other assets less liabilities. It may also include investments in money market or similar funds managed by the investment adviser or its affiliates that are not offered to the public.

** HY refers to high yield debt securities and EMD refers to emerging market debt securities.

An opportunistic approach to interest rate positioning

American Funds Strategic Bond Fund adjusts its positioning as opportunities develop. Its portfolio managers focus on active interest rate positioning using duration, yield curve and inflation. Although important, credit is expected to be a less prominent driver of returns.

American Funds Strategic Bond Fund (R-6) duration relative to Bloomberg U.S. Aggregate Index (years)

Chart shows the average interest rate duration of American Funds Strategic Bond Fund, relative to that of the Bloomberg U.S. Aggregate Index and the Morningstar Intermediate Bond category average, on a quarterly basis between December 2020 and December 2023. In fourth quarter 2020, the fund's average duration was negative 1.5 years and the category average was negative 0.77 years. In first quarter 2021, the fund's average duration was 3.4 years and the category average was negative 0.68 years. In second quarter 2021, the fund's average duration was negative 0.8 years and the category average was negative 0.96 years. In third quarter 2021, the fund's average duration was negative 0.3 years and the category average was negative 0.57 years. In fourth quarter 2021, the fund's average duration was negative 1.4 years and the category average was negative 0.33 years. In first quarter 2022, the fund's average duration was 3.0 years and the category average was negative 0.39 years. During this period, the fund added duration at front-end of curve as a short-term hedge given downside risks. In second quarter 2022, the fund’s average duration was negative 0.8 years and the category average was negative 0.42 years. In third quarter 2022, the fund's average duration was 3.1 years and the category average was negative 0.05 years. In fourth quarter 2022, the fund's average duration was negative 0.7 years and the category average was negative 0.11 years. In first quarter 2023, the fund's average duration was negative 0.4 years and the category average was negative 0.03 years. In second quarter 2023, the fund's average duration was 1.10 years and the category average was 0.09 years. In third quarter 2023, the fund's average duration was 0.6 years and the category average was negative 0.02 years. In fourth quarter 2023, the fund's average duration was negative 2.8 years and the category average was 0.08 years. During this period, the fund cut duration in response to yields falling sharply as the Fed pivot became clear.

Sources: Capital Group, Bloomberg Index Services Ltd., Morningstar. As of 12/31/2023. 

†Category represents the US Fund Intermediate Core-Plus Bond.

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The S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. The Bloomberg U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market. The indexes are unmanaged, and their results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes. The market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. There have been periods when the funds have lagged the indexes.

Intermediate-term core-plus bond portfolios invest primarily in investment-grade U.S. fixed-income issues including government, corporate, and securitized debt, but generally have greater flexibility than core offerings to hold non-core sectors such as corporate high yield, bank loan, emerging-markets debt, and non-U.S. currency exposures. Their durations (a measure of interest-rate sensitivity) typically range between 75% and 125% of the three-year average of the effective duration of the Morningstar Core Bond Index.

Multisector bond portfolios seek income by diversifying their assets among several fixed-income sectors, usually U.S. government obligations, U.S. corporate bonds, foreign bonds, and high-yield U.S. debt securities. These portfolios typically hold 35% to 65% of bond assets in securities that are not rated or are rated by a major agency such as Standard & Poor’s or Moody’s at the level of BB (considered speculative for taxable bonds) and below. Intermediate Core Category: Intermediate-term core bond portfolios invest primarily in investment-grade U.S. fixed-income issues including government, corporate, and securitized debt, and hold less than 5% in below-investment-grade exposures. Their durations (a measure of interest-rate sensitivity) typically range between 75% and 125% of the three-year average of the effective duration of the Morningstar Core Bond Index.

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Investing for short periods makes losses more likely. Prices and returns will vary, so investors may lose money. View mutual fund expense ratios and returns.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional securities, such as stocks and bonds.
Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
The return of principal for bond portfolios and for portfolios with significant underlying bond holdings is not guaranteed. Investments are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
Frequent and active trading of American Funds Strategic Bond Fund's portfolio securities may occur, which may involve correspondingly greater transaction costs, adversely affecting the results.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries.
Capital Group offers a range of share classes designed to meet the needs of retirement plan sponsors and participants. The different share classes incorporate varying levels of financial professional compensation and service provider payments. Because Class R-6 shares do not include any recordkeeping payments, expenses are lower and results are higher. Other share classes that include recordkeeping costs have higher expenses and lower results than Class R-6.
There have been periods when the results lagged the index(es) and/or average(s). The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg's licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
© 2024 Morningstar, Inc. All Rights Reserved. Some of the information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar, its content providers nor Capital Group are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by Capital Group.