OPPORTUNITIES
Higher yields uncover fresh opportunities
With bonds offering higher yields across the full spectrum of the fixed income asset class, there is now greater potential to derive a meaningful level of income from your fixed income investments.
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Income is back in fixed income
It’s clear that the yields have risen significantly across different areas of fixed income markets since their low points in 2021.
Past results are not a guarantee of future results.
2021 bars are the low points: 3 January (US investment-grade corporate bonds); 6 July (US high-yield corporates); 4 January (emerging market government bonds); 3 August (securitised bonds). 2022 bars are as at 30 September 2022. The indices of the respective fixed income sectors are outlined in footnote 1 (securitised bonds represented by Bloomberg US CMBS ex-AAA Index). Yield refers to Yield to Worst, a common measure of yield. Source: Bloomberg
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But diversification is key
While income opportunities are abundant, diversification remains as important as ever as no single sector has been able to deliver the best result year after year. Focusing on a single sector could result in a bumpy ride.
This illustration analyses the calendar-year returns from the above four fixed income sectors each year since 2008. Past results are not a guarantee of future results.
Investors cannot invest directly in an index.
* Data as at 31 December 2022 in US dollar terms. Based on the four fixed income sectors and their respective indices as outlined in footnote 1 (securitised bonds represented by 80% Bloomberg US CMBS ex-AAA Index and 20% Bloomberg ABS Ex AAA Index). Sources: Bloomberg, Capital Group
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The power of 4
Capital Group Multi-Sector Income Fund (LUX)
A fund that combines the four sectors in a single portfolio offers the potential to benefit from attractive income along with a smoother ride. Click below to watch video.
The Multi-Sector Income Fund combines the power of four key fixed income credit sectors, each of which has distinctive income characteristics.
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Our portfolio managers have the flexibility to dynamically allocate across the four sectors, tilting the overall portfolio allocation to reflect the latest investment views. This flexibility helps the fund take advantage of opportunities and mitigate risks.
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The allocations (%) illustrated indicate the typical range within which a sector will be represented. The ‘neutral’ allocation (%) reflects the allocation under normal market conditions.
1. The managers also have the option to invest in other areas in an opportunistic way if they identify particularly attractive opportunities, but this typically remains a small part of the overall allocation. This may include, but is not limited to, US government debt, municipal debt and non-corporate credit, in response to market conditions.
While there is flexibility to adjust the portfolio to changing market environments, this is utilised within guardrails to keep the overall portfolio within the fund’s strategic allocation.
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Past results are not a guarantee of future results.
Data as at 31 December 2022 in USD terms. The different sectors are represented by the indices outlined in the reference index in footnote 2. Yield refers to yield to worst, a common measure of yield. Sources: Bloomberg, Capital Group
The fund follows the philosophy, process and has the same investment team as a multi-sector fixed income strategy from the US we have managed since 2019. Through a turbulent period for bond markets, the strategy has delivered a reliable distribution yield.
Historical distribution yield
12-month distribution yield (%) from 31 March 2019 (strategy inception) to 31 December 2022 in US$ terms
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Past results are not a guarantee of future results.
Results shown for a representative account of the Capital Group Multi-Sector Fixed Income strategy, which is not registered for sale outside of the United States. Based on monthly data.
ESG FOCUS
ESG integration and beyond
ESG is woven into our investment process through three tightly integrated components: investment frameworks, monitoring and engagement. The fund also applies ESG and norms-based screens and has an explicit carbon target.2, 3
For more information on our approach to ESG please see ESG at Capital Group.
Screens
The fund excludes issuers within certain sectors, those that violate UN Global Compact principles and sovereigns that score below the Capital Group proprietary framework’s ESG threshold.
Carbon target
The fund’s carbon footprint is also monitored and managed to be at least 30% lower than its reference index (for all eligible corporate bonds in the portfolio).2,3
The fund has adopted Sustainable Finance Disclosure Regulation (SFDR) article 8 requirements. The SFDR classification is related to the EU’s regulation and is not equivalent to approval or recognition as an ESG fund by regulators in Asia Pacific.
EXPERIENCE COUNTS
Managed by an experienced and specialist team
Each of the four sectors is managed by an experienced sector specialist portfolio manager. They are supported by large, dedicated investment analyst teams that help create a portfolio built on deep insights into each of the securities the fund invests in.
Damien J. McCann
Principal Investment Officer
22 years with Capital
22 years of industry experience
Shannon Ward
US High Yield
5 years with Capital
29 years of industry experience
Scott Sykes
US investment-grade corporates
16 years with Capital
21 years of industry experience
Kirstie Spence
Emerging markets debt
26 years with Capital
26 years of industry experience
Xavier Goss
Securitised credit
1 year with Capital
18 years of industry experience
WHY CAPITAL GROUP
A leader in global investing
For more than 90 years, we’ve been searching the world for long-term opportunities, making Capital one of the oldest global investors and we have grown to become one of the world’s largest active fixed income fund managers.
Global investing credentials
US$2.2trn
in total assets managed
26 years
average experience of our fixed income portfolio managers
US$452bn
Fixed income assets managed*
*Assets under management by Capital Fixed Income Investors.
Capital Group Multi-Sector Income Fund (LUX)
All data as at 31 December 2022 and attributed to Capital Group, unless otherwise specified.
- Indices used to represent US high yield corporates: Bloomberg US High Yield Index 2% Issuer Cap; US investment-grade corporates: Bloomberg US Corporate Index; emerging market government bonds: JPMorgan EMBI Global Diversified Index
- Reference index: 45% Bloomberg US High Yield Index 2% Issuer Cap; 30% Bloomberg US Corporate Index; 15% JPMorgan EMBI Global Diversified Index; 8% Bloomberg CMBS Ex AAA Index; 2% Bloomberg ABS Ex AAA Index
- Carbon footprint data is based on weighted average carbon intensity
Risk factors you should consider before investing:
- 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 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 – sets out risks, which, depending on the fund, may include risks associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.
- The fund may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
The information in relation to the index is provided for context and illustration only. The fund is an actively managed UCITS. It is not managed in reference to a benchmark. Past results are not a guarantee of future results.