Fundamental security selection in corporate bonds
No “artificial additives”
Capital Group’s high-quality approach to investment-grade credit may provide a higher degree of stability than its peer universe.
Benefits of a higher-quality approach
As an example, the global corporate peer universe highlights scope creep into riskier high yield bonds.
Capital Group Global Corporate Bond Fund (LUX)
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No active allocation to sub-investment grade bonds
Investments must at least be rated BBB- and equivalent.
Fallen angels must be sold within three months
Portfolio managers are not forced to sell at the point of downgrade when values are typically at their lowest.
Fallen angels: bonds that were once investment grade but has since fallen to high yield status.
Data as at 30 June 2023. Sources: Morningstar, Capital Group
*Universe breakdown is based on latest available data from Morningstar.
Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor’s, Moody’s and/or Fitch, as an indication of an issuer’s creditworthiness.
If agency ratings differ, the security will be considered to have received the highest of those ratings, consistent with the fund’s investment policies.
Damir Bettini
Fixed Income Portfolio manager
“The balance of risks seems finely poised but now is not a time for complacency, and selectivity is key”
Damir Bettini, Principal Investment Officer of Capital Group Global Corporate Bond Fund (LUX).
A complementary building block for a balanced portfolio
In addition to the strict quality criteria, Capital Group’s approach to investment-grade credit strategies further manages portfolio risk by fully hedging foreign currencies and limiting active duration exposure. This results in a clear risk profile designed to minimise unwanted risk factors in investor’s overall portfolio.
In times of market upheaval, this higher-quality fixed income approach can potentially serve as a ballast to investor’s investment portfolio by lowering its overall volatility.
Explore Capital Group’s higher-quality credit portfolios
Provides global exposure to corporate investment grade bonds.
Provides exposure to USD-denominated corporate investment grade bonds.
For Financial Professional use only
All data as at 30 June 2023 and attributed to Capital Group (unless otherwise stated).
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.
Fund risks
Capital Group Global Corporate Bond Fund (LUX)
Bonds risk: The value of bonds can change as a result of interest rate changes – typically when interest rates rise, bond values fall. Funds investing in bonds are exposed to credit risk. A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless.
Counterparty risk: Other financial institutions provide services to the fund such as safekeeping of assets, or may serve as a counterparty to financial contracts such as derivatives. There is a risk the counterparty will not meet their obligations.
Derivative instruments risk: Derivatives are financial instruments deriving their value from an underlying asset and may be used to hedge existing exposures or to gain economic exposure. A derivative instrument may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
Operational risk: The risk of potential loss resulting from inadequate or failed internal processes, people and systems or from external events.
Sustainability risk: Environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment of the fund.
Fund risks
Capital Group US Corporate Bond Fund (LUX)
Bonds risk: The value of bonds can change as a result of interest rate changes – typically when interest rates rise, bond values fall. Funds investing in bonds are exposed to credit risk. A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless.
Counterparty risk: Other financial institutions provide services to the fund such as safekeeping of assets, or may serve as a counterparty to financial contracts such as derivatives. There is a risk the counterparty will not meet their obligations.
Derivative instruments risk: Derivatives are financial instruments deriving their value from an underlying asset and may be used to hedge existing exposures or to gain economic exposure. A derivative instrument may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
Operational risk: The risk of potential loss resulting from inadequate or failed internal processes, people and systems or from external events.
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. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
- Some portfolios may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
- There are additional risks associated with these funds. See fund risks for more information.