OUR APPROACH
No “artificial additives”
Avoid scope creep. Take comfort with a higher quality approach to credit
WHY CONSIDER
Attractive yield pick-up
Potential for a consistent yield pick-up alongside diversification benefits
OUR SOLUTION
A complementary building block for a balanced portfolio
Providing investors with a clear risk profile, facilitating portfolio construction
No “artificial additives” for peace of mind
A strict adherence to quality means we don’t sacrifice safety in pursuit of higher yields. Capital Group’s higher-quality approach to investment-grade credit gives you greater peace of mind as it provides 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.
Investment guidelines of Capital Group Global Corporate
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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 31 December 2021. 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 strategy’s investment policies.
“The balance of risks seems finely poised but now is not a time for complacency, and selectivity is key”Attractive yield pick-up
The credit spread between the investment-grade bonds of sovereigns and corporates has held at a relatively stable level for around a decade. This presents an attractive yield pick-up and an opportunity to benefit from greater diversification through depth of issuers and breadth across sectors.
Consistent yield pick-up has contributed to meaningful cumulative returns
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Past results are not a guarantee of future results.
10-year data as at 31 December 2021 in USD terms. Source: Bloomberg
1. Bloomberg Global Corporate Index
2. Bloomberg Global Sovereign Index
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.
Find out more about our global investment-grade credit strategy in focus
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.
- Depending on the strategy, risks may be associated with investing in fixed income, derivatives, 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.