At least 80% of our bond funds (F-2 shares) beat their Morningstar category average annual return for the 3- and 5-year periods ended 12/31/21
HIGHER TOLERANCE FOR RISK
Charles is 65 years old and plans to retire soon. He will depend on his retirement account to cover most costs but can downsize his home for additional income.
FIXED INCOME ROLE DISTRIBUTION
FIXED INCOME ROLE DISTRIBUTION
LOW TOLERANCE FOR RISK
15 years into retirement, Sandeep largely relies on his $1M retirement fund. He is concerned about market swings and is focused on preserving his wealth.
FIXED INCOME ROLE DISTRIBUTION
FIXED INCOME ROLE DISTRIBUTION
MODERATE TOLERANCE FOR RISK
With decades until retirement, Vanessa is saving to purchase her first home. Steadily employed, she contributes regularly to her retirement account.
FIXED INCOME ROLE DISTRIBUTION
FIXED INCOME ROLE DISTRIBUTION
MODERATE TOLERANCE FOR RISK
Naomi recently retired and lives off her retirement account. She has a moderate tolerance for risk, wants consistent income, and to protect her purchasing power.
FIXED INCOME ROLE DISTRIBUTION
FIXED INCOME ROLE DISTRIBUTION
*Duration is a measure of the sensitivity of the price of a bond to a change in interest rates.
▉ S&L recession
▉ 2Ks recession
▉ Great Recession
▉ COVID-19 recession
See disclosure †
See disclosure †
With markets anticipating rates peaking, the traditional core bond funds’ diversification potential should return as equity volatility persists.
See disclosure ‡
Extra yield cushion potential in high-income bond sectors can help investors navigate an uncertain environment.
▉ 1-3 year taxable
▉ Intermediate taxable
▉ 1-5 year municipal
(assumes tax-equivalent yield impacts)
▉ 1-10 year municipal
(assumes tax-equivalent yield impacts)
See disclosure Δ
See disclosure Δ
CD's offered competitive returns when rates were rising, but they forgo bonds’ potential positive price appreciation when rates begin to fall.
Disclosure †
Sources: Capital Group, Bloomberg Index Services Ltd. Recession periods defined by the National Bureau of Economic Research. As of 3/31/23. Core represented by the Bloomberg U.S. Aggregate Index. Recession dates: Savings & Loan (S&L) recession, 7/90 – 3/91; Early 2000s (2Ks) recession, 3/01 – 11/01; Great Recession, 12/07 – 6/09; COVID-19 (C19) recession, 2/20 – 4/20.
Disclosure ‡
Sources: Capital Group, Bloomberg, JPMorgan. Yields and monthly returns as of 3/31/23. Data goes back to 2000 for all sectors except for emerging markets, which goes back to 2003. Based on average monthly returns for each sector when in a +/– 0.30% range of yield to worst. Sector yields and returns above for indexes as follows High-yield munis: Bloomberg Municipal High Yield Index, Investment-grade corporates: Bloomberg U.S. Investment Grade Corporates Index, High-yield corporates: Bloomberg U.S. Corporate High Yield Index and Emerging markets debt: 50% J.P. Morgan EMBI Global Diversified Index / 50% J.P. Morgan GBI-EM Global Diversified Index blend. The average yield to worst is the lowest yield that can be realized by either calling or putting on one of the available call/put dates, or holding a bond to maturity.
Disclosure Δ
For illustrative purposes only.
As of 3/31/23. Sources: Capital Group, Bloomberg Index Services, Ltd. Total returns are calculated by adding the index yields on specified date and hypothetical price change. That price change is calculated by isolating the impact of index durations on specified date and the specified shift in interest rates in a level fashion across the yield curve. CD rate: Bankrate.com U.S. 1-year High-Yield Rate. 1–3-year taxable: Bloomberg U.S. Aggregate 1–3 Year Index, Intermediate taxable: Bloomberg U.S. Aggregate Intermediate Index, 1–5 year municipal: Bloomberg Municipal Short 1–5 year Index, 1–10 year municipal: Bloomberg Municipal Short-Intermediate 1–10 year Index. Taxable-equivalent rate assumptions for muni index yields are based on a federal marginal tax rate of 37%, the top 2023 rate. In addition, we have applied the 3.8% Medicare tax. Certificates of deposit (CDs) are FDIC-insured and, if held to maturity, offer a guaranteed return of principal. Unlike taxable and municipal bonds, certificates of deposit (CDs) are FDIC-insured and, if held to maturity, offer a guaranteed return of principal.
Model portfolios are only available through registered investment advisers. This content is intended for registered investment advisers and their clients.
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 model returns. View mutual fund expense ratios and returns. View ETF expense ratios and returns. View current mutual fund SEC yields.
Unless otherwise noted, model results reflect changes, if any, in the underlying fund allocations over the model's lifetime. Underlying funds may have been added or removed during a model's lifetime. Allocations are rebalanced monthly. Rebalancing approaches may differ depending on where the account is held. For historical underlying fund allocations, view model portfolios.
Market price returns are determined using the official closing price of the fund's shares and do not represent the returns you would receive if you traded shares at other times.
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.
Capital Group exchange-traded funds (ETFs) are actively managed and do not seek to replicate a specific index. ETFs are bought and sold through an exchange at the then current market price, not net asset value (NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV when traded on an exchange. Brokerage commissions will reduce returns. There can be no guarantee that an active market for ETFs will develop or be maintained, or that the ETF's listing will continue or remain unchanged.
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. For most funds, unless otherwise noted below, if agency ratings differ, a security will be considered to have received the highest of those ratings, consistent with applicable investment policies. Securities in the Unrated category have not been rated by a rating agency; however, the investment adviser performs its own credit analysis and assigns comparable ratings that are used for compliance with applicable investment policies. Bond ratings for the American Funds Portfolio Series relate to the securities held by the portfolios' underlying mutual funds, and if agency ratings of those holdings differ, the security will be considered to have received the highest of those ratings.
For the fund(s) noted, if agency ratings differ, consistent with applicable investment policies, a security will be considered to have received the middle rating. If only two agencies rate a security, the lower rating is used. If only one rates a security, that single rating is used. (American High-Income Trust)
For the fund(s) noted, if agency ratings differ, such securities are placed in the lowest category, consistent with applicable investment policies. (American High-Income Municipal Bond Fund)
Investments in mortgage-related securities involve additional risks, such as prepayment risk.
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.
Fund shares of U.S. Government Securities Fund are not guaranteed by the U.S. government.
Allocations may not achieve investment objectives. The portfolios' risks are related to the risks of the underlying funds as described herein, in proportion to their allocations.
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 funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
Income from municipal bonds may be subject to state or local income taxes and/or the federal alternative minimum tax (except for The Tax-Exempt Bond Fund of America). Certain other income, as well as capital gain distributions, may be taxable.
While not directly correlated to changes in interest rates, the values of inflation-linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations.
American Funds Strategic Bond Fund may engage in frequent and active trading of its portfolio securities, which may involve correspondingly greater transaction costs, adversely affecting the fund's 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.
Nondiversified funds have the ability to invest a larger percentage of assets in securities of individual issuers than a diversified fund. As a result, a single issuer could adversely affect a fund's results more than if the fund invested a smaller percentage of assets in securities of that issuer. Refer to the applicable prospectus for details. (American Funds Emerging Markets Bond Fund)
As nondiversified funds, Capital Group ETFs have the ability to invest a larger percentage of assets in securities of individual issuers than a diversified fund. As a result, a single issuer could adversely affect a fund's results more than if the fund invested a smaller percentage of assets in securities of that issuer. Refer to the applicable prospectus for details.
State-specific tax-exempt funds are more susceptible to factors adversely affecting issuers of their states' tax-exempt securities than more widely diversified municipal bond funds.
There may have been periods when the results lagged the index(es). The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index. Index/Index blends for Capital Group/American Funds Model Portfolios are those that the Portfolio Solutions Committee believes most closely approximate the investment universe of a given model portfolio. The index/index blends do not specifically represent the benchmarks of the underlying funds in the American Funds model portfolio.
Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan's prior written approval. Copyright 2023, J.P. Morgan Chase & Co. All rights reserved. (J.P. Morgan Index Blend - 50% JPM EMBI Global Diversified & 50% JPM GBI-EM Global Diversified)
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Each S&P Index ("Index") shown is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2023 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC.
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Holdings are weighted averages of the underlying funds.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses.
When applicable, results reflect fee waivers and/or expense reimbursements, without which they would have been lower and net expenses higher. Please see capitalgroup.com for more information. Read details about how waivers and/or reimbursements affect the results for each fund. View results and yields without fee waiver and/or expense reimbursement.
For Class F-2 shares of the funds listed below, the investment adviser has agreed to reimburse a portion of fund expenses through the date(s) listed below, without which results would have been lower and net expenses higher.
Certain share classes were offered after the inception dates of some funds. Results for these shares prior to the dates of first sale are hypothetical based on the original share class results without a sales charge, adjusted for typical estimated expenses.
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Model portfolios are provided to financial intermediaries who may or may not recommend them to clients. The portfolios consist of an allocation of funds for investors to consider and are not intended to be investment recommendations. The portfolios are asset allocations designed for individuals with different time horizons, investment objectives, and risk profiles. Allocations may change and may not achieve investment objectives. If a cash allocation is not reflected in a model, the intermediary may choose to add one. Capital Group does not have investment discretion or authority over investment allocations in client accounts. Rebalancing approaches may differ depending on where the account is held. Investors should talk to their financial professional for information on other investment alternatives that may be available. In making investment decisions, investors should consider their other assets, income, and investments. Visit capitalgroup.com for current allocations.
American Funds Distributors, Inc.
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.
©2023 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.
The average yield to worst is the lowest yield that can be realized by either calling or putting on one of the available call/put dates, or holding a bond to maturity.
Bloomberg Barclays U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market.
Bloomberg Barclays High Yield Municipal Bond Index is a market-value-weighted index composed of municipal bonds rated below BBB/Baa.
Bloomberg Barclays U.S. Corporate Investment Grade Index represents the universe of investment grade, publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements.
Bloomberg Barclays U.S. Corporate High Yield Index covers the universe of fixed-rate non-investment-grade debt.
The J.P. Morgan Emerging Market Bond Index (EMBI) Global Diversified is a uniquely weighted emerging market debt benchmark that tracks total returns for U.S. dollar-denominated bonds issued by emerging market sovereign and quasi-sovereign entities. J.P. Morgan Government Bond Index — Emerging Markets (GBI-EM) Global Diversified covers the universe of regularly traded, liquid fixed-rate, domestic currency emerging market government bonds to which international investors can gain exposure. The 50%/50% J.P. Morgan EMBI Global/J.P. Morgan GBI-EM Global Diversified blends the J.P. Morgan EMBI Global Index with the J.P. Morgan GBI-EM Global Diversified Index by weighting their cumulative total returns at 50% each. This assumes the blend is rebalanced monthly.
Bloomberg U.S. Government/Credit 1–3 Years Index is a market-value weighted index that tracks the total return results of fixed-rate, publicly placed, dollar-denominated obligations issued by the U.S. Treasury, U.S. government agencies, quasi-federal corporations, corporate or foreign debt guaranteed by the U.S. government, and U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements, with maturities of one to three years.
Bloomberg U.S. Aggregate Intermediate Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market including instruments with a remaining maturity of no greater than 10 years.
Bloomberg Municipal Short 1–5 year Index is a market-weighted that covers components of the Bloomberg Municipal Bond Index with maturities ranging from 1-5 years.
Bloomberg Municipal Short-Intermediate 1–10 year Index is a market-weighted index that covers components of the Bloomberg Municipal Bond Index with maturities ranging from 1-10 years.