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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1, 2 OR 754

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

2022 Midyear Outlook

Long-term perspective on markets and economies

MIDYEAR OUTLOOK

Late cycle is a time for "all-weather" investing

The economic environment is changing rapidly, and risks are rising. But signs of growth remain as the world recovers from the pandemic. Maintaining a balanced all-weather portfolio makes sense in any climate.

Sources: Capital Group, FactSet. GDP data are in USD and are the latest available through 12/31/21. Country positions within the business cycle are forward-looking estimates by Capital Group economists as of April 2022.

U.S. OUTLOOK

In the midst of uncertainty, boring is beautiful

Is the U.S. headed for recession? Much will depend on the labour market and the actions of the Federal Reserve, but there continue to be areas of solid growth across the economy. With market volatility rising, look for a mix of old-economy companies that make tangible products and tech leaders with proven earnings growth.

The image presents a quote from Equity Portfolio Manager Diana Wagner: “In this environment, I’m looking for companies that can make their own growth.”

Rising dividends can counter inflation

Proven dividend growers can help mitigate market volatility and bolster returns when inflation is rising. In addition, select health care companies with promising drug pipelines appear attractively valued relative to the broader market.

INTERNATIONAL OUTLOOK

What’s old is new again

The war in Ukraine has cast a pall over much of Europe, but a renewed investor focus on value-oriented stocks could prove to be a silver lining.

The image shows that non-U.S. indexes are more heavily weighted toward lower growth, value-oriented sectors based on the regional exposure of each sector within the MSCI All Country World Index. For non-U.S. markets, the materials sector exposure is 68%. Financials is 55%. Industrials is 49%. Energy is 48%. Consumer staples is 46%. Utilities is 43%. Consumer discretionary is 38%. Real estate is 35%. Communication services is 32%. Health care is 31%. Information technology is 21%. The remaining percentage for each sector is aligned to the U.S. region.

Sources: MSCI, RIMES. As of April 30, 2022.

Mining and industrial companies may represent long-term value

Some commodity prices could remain high for years, creating opportunity for mining companies. And some industrial companies are making buildings more sustainable, a key focus in Europe and other international markets.

The image shows that non-U.S. indexes are more heavily weighted toward lower growth, value-oriented sectors based on the regional exposure of each sector within the MSCI All Country World Index. For non-U.S. markets, the materials sector exposure is 68%. Financials is 55%. Industrials is 49%. Energy is 48%. Consumer staples is 46%. Utilities is 43%. Consumer discretionary is 38%. Real estate is 35%. Communication services is 32%. Health care is 31%. Information technology is 21%. The remaining percentage for each sector is aligned to the U.S. region.

Sources: MSCI, RIMES. As of April 30, 2022.

FIXED INCOME OUTLOOK

Are better days ahead for bonds?

Fixed income had a rough ride in the early months of 2022, but history suggest better days may be ahead. Bonds still offer investors income, diversification, inflation protection and a measure of stability when equity markets are volatile.

Income is returning to fixed income

Rising yields have resulted in short-term pain for bond investors, but they can also translate into more income from bonds.

Get the 2022 Outlook report

Long-term perspective on markets and economies

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