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Glossary

Asset-backed – Refers to asset-backed securities, which are financial securities backed by a pool of income-generating assets such as home equity loans, student loans and auto loans.
Bottom-up approach – An investment approach that focuses on the analysis of individual securities before subsequently considering economic and market cycles.
Corporate – Refers to corporate bonds, which are debt issued by a company in order for it to raise capital. An investor who buys a corporate bond is effectively lending money to the company in return for a series of interest payments
Emerging market debt (EMD) – A term used to describe bonds issued by countries with developing economies as well as by corporations within those nations.
Fixed income – Debt instruments issued by a government, corporate or other entity.
High quality credit – Generally corporate bonds with an investment-grade rating from independent rating agencies.
High yield / higher yielding – Generally lower quality, higher income-generating bonds, such as corporate bonds with a high yield rating as a result of being considered to be a riskier sector than investment-grade credit in fixed income.
Investment-grade – Refers to a bond that has been awarded a ‘Baa3’ or higher credit rating by Moody’s, or ‘BBB-’ or higher credit rating by Standard & Poor’s or Fitch.
Long-duration portfolios – These portfolios comprise long-duration stocks, which typically have low earnings in the near term and are expected to generate most of their cashflows in the distant future. They tend to be more sensitive to interest rate rises because the present value of these cashflows decrease when discount rate increases.
US mortgages – Refers to US mortgage-backed securities. Mortgage-backed securities (MBS) are investment products similar to bonds. Each MBS consists of a bundle of home loans and other real estate debt bought from the banks that issued them. Investors in MBS receive periodic payments similar to bond coupon payments.
Yield – The income returned on an investment, such as the interest or dividends received from holding an asset. The yield is usually expressed as an annual percentage rate based on the investment’s cost, current market.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. The information provided is not intended to be comprehensive or to provide advice.

All data as at 31 December 2023 and attributed to Capital Group, unless otherwise stated. All values in USD.
Capital’s fixed income assets are managed by Capital Fixed Income Investors. Asset size comparison provided by Morningstar. 

Risk factors you should consider before investing:

• This material is not intended to provide investment advice or be considered a personal recommendation.
• The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
• Past results are not a guarantee of future results.
• If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease.
• The Prospectus – together with any locally-required offering documentation – sets out risks, which, depending on the fund, may include risks associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.
   

Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organisation; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.