Finding balance in a volatile world
Julie Dickson
Investment Director

In this Q&A, investment director Julie Dickson discusses:

  • Capital Group Global Allocation Fund (LUX) (CGGA)’s balanced approach to offering growth and resilience. 
  • How the fund brings together Capital Group’s research and management capabilities in one portfolio.
  • What has driven the fund’s results so far.

Many multi–asset funds invest in a wide range of asset classes. How has the fund managed to deliver a good track record of results with a relatively simple set of assets?

By approaching investing with a long-term view in mind, the fund seeks the balanced accomplishment of three objectives: long–term growth of capital, conservation of principal and current income by investing in equities and fixed income securities from around the world.

We are finding that some clients are increasingly concerned about the complex structure of multi-asset products, at a time when market volatility is on the rise. In our view, less is more in terms of what the fund invests in. The less complicated an investment is, the easier it is to understand the associated risks.

There are a wide variety of complex instruments – such as exotic derivatives – that can appear to be solid investments in times of stable market conditions by offering the potential to enhance returns and minimise risk. However, during times of market dislocations and rising volatility, such instruments can become very illiquid, and highly correlated, due to their complexity – therefore possibly defeating their enhanced return and risk management purposes.

Not since the global financial crisis – when these types of derivatives were blamed for increasing systematic risks – have these instruments been tested in extreme market conditions and many unintended risks may remain.

Our CGGA portfolio managers believe that they can deliver attractive investor outcomes over the long term without having to make extensive use of exotic derivatives or overlay strategies, and that ensuring liquidity of assets is a key consideration. At Capital, we take a long-term approach and believe that short– term tactical asset allocation decisions do not pay off over time. Our portfolio managers limit the number of decisions they have to get right by investing in listed equities, bonds and cash, with a focus on relative value at the security level.

CGGA has a track record of over five years and during this period, despite a tricky market environment of strong growth followed by a period of elevated volatility, the fund held up well (see chart on page 4). It is currently ranked in the top decile among its competitors over the three and five-year periods (annualised).1 The fund also holds a Morningstar Analyst RatingTM of Gold – the only fund within the category to achieve a Gold rating.2


What is CGGA’s asset allocation process? 

The asset mix is primarily driven by bottom-up fundamental security selection and a focus on relative value, although top-down views will also play a part in the portfolio construction process. The fund combines on-the-ground fundamental research with global macroeconomic and political analysis, making full use of our globally integrated research network.

Individual portfolio managers look at the valuations and risk parameters of each investment – and the relationship between them – when building the portfolio to consider upside potential and downside protection qualities.

For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. Investment team information correct as at 30 June 2020. The Capital Group companies manage equities through three investment divisions that 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.


How do the fixed income and equity research analysts work together? 

The CGGA team structure consists of two dedicated fixed income managers and four balanced managers with the flexibility to invest across the range of equity and fixed income opportunities. As part of this structure, the managers work with both equity and fixed income research teams.

Fundamental research is the backbone of our system. The fund benefits directly from an integrated network of over 200 investment professionals based around the world. This includes macro strategy research, which is helpful in the context of gaining a deeper understanding of government bonds and interest rate risks – as well as the impact of the economic cycle on companies in economically sensitive sectors such as energy and financials.

The fund brings together all of Capital’s extensive equity and fixed income research management capabilities in one portfolio. Equity and fixed income analysts also work closely together, especially in areas such as corporate bonds where there is an overlap with equity research.


Past results are not a guarantee of future results.

1. Data as at 30 June 2020. Net of management fees and expenses for the Z share class, as a representative share class, versus the Morningstar EAA Funds USD Moderate Allocation (oldest share class) category. Please visit for further details.

2. Morningstar Analyst Rating™ as at 28 May 2020. Morningstar category: USD Moderate Allocation.

3. Before fees and expenses and with income reinvested. The impact of fees on returns may vary depending on the investor and share class. Please visit for further details. Source: Capital Group.

4. The blend is 60% MSCI All Country World Index (net dividends reinvested) / 40% Bloomberg Barclays Global Aggregate Bond Index. Sources: MSCI, Bloomberg Barclays.

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 guide to 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 – 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.

Julie Dickson is an investment director at Capital Group. She has 28 years of investment industry experience and has been with Capital Group for six years. She holds a bachelor’s degree in business management with concentration in finance from Cornell University. She also holds both the Investment Management Certificate and the Chartered Financial Analyst® designation. Julie is based in London.


Past results are not a guarantee of future results. 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. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

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. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.