Fundamental security selection in global corporate bonds
We believe deep, fundamental research of every individual security should form the basis for returns and yield – not high yield names that add risks and distort an investment-grade portfolio’s risk profile. To take full advantage of our global research, we take a unique approach whereby research analysts, as sector specialists, invest in their best ideas to build an information advantage in the portfolio.
High quality approach to credit
Avoids scope creep with reliable investment-grade credit exposure
Fundamental research has driven returns
Targets sector and security selection for long-term excess returns
Sector specialists build the portfolio
Portfolio is built directly by investment analysts
High quality approach to credit
The portfolio does not allow the purchase of sub-investment-grade securities to boost yield or short-term returns. With active allocations limited to high-quality issuers, our Global Corporate Bond portfolio provides a clear risk profile – and more stable outcomes – to investors looking for investment grade credit exposure.
Investment guidelines of Capital Group Global Corporate Bond Fund Hedged (AU)
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
The team is 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 have since fallen to high yield status.
Data as at 31 December 2020. Sources: eVestment, Capital Group, Standard & Poor’s
Universe breakdown is based on latest available data from eVestment.
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.
Fundamental research has been key driver of returns
Our signature approach is bottom-up investing, based on global, on-the-ground research. Instead of relying on top-down macro calls, for example, we stick to our strengths in fundamental research.
“We aim to generate the majority of our excess returns from the credit rather than the rates component of returns.
Typically, in our global corporate funds, we would expect to derive 90% of our excess return from sector and security selection.”
Damir Bettini, Principal Investment Officer of Capital Group Global Corporate Bond Hedged (AU), explains why selectivity remains key in this Q&A.
Uniquely at Capital Group, our research analysts invest in their best ideas. They are specialists in their respective industries and have built up a deep understanding of the companies within their coverage. Putting this knowledge to work, the investment analysts invest in their convictions and we believe the portfolio benefits from an information advantage.
Investors in the strategy
Average years of investment experience
15 years’ experience
“We don't call ourselves research analysts. We call ourselves investment analysts, because the goal is to come up with the best investment idea we can on a risk adjusted basis.
Rather than being a good credit rater or figuring out what the best company or issuer looks like, we’re focused on coming up with the best investment idea.”
Team information based on the Global Corporate Bond representative account as at 31 March 2021. Years of experience as at 31 December 2020. Source: Capital Group.
Capital Group Global Corporate Bond Fund Hedged (AU)
Fundamental security selection in global corporate bonds.
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.
The Prospectus – together with any locally-required offering documentation – set out risks, which, depending on the fund, may include risks associated with investing in fixed income, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.
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.
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