Long Duration Govt./Credit (and plus version) | Capital Group

  • ACCOUNTS
  • INVESTMENTS
  • CLIENT SOLUTIONS
  • INSIGHTS
  • EVENTS
  • ABOUT US

LIABILITY-DRIVEN INVESTING

Long Duration Govt./Credit (plus version available)

Vehicle: Collective Investment Trust, Separate Account

 You must be logged in to view select strategy information

Overview

Objective: Seeks to provide a portfolio of primarily long duration government and corporate bonds to reduce client-specific asset/liability volatility.

  • Strategy inception date: 1998
  • Total long duration assets (billions): $6.6
  • Benchmark: Bloomberg Barclays U.S. Long Government/Credit Index
  • Duration range: +/– two years of benchmark duration

Assets in strategy as of June 30, 2017.


Approach
  • Our approach is to build long duration portfolios that seek to provide excess return primarily from sector allocation, industry selection, research-based corporate bond selection as well as duration and yield curve management
  • The strategy seeks to generate appropriate risk-adjusted excess return by investing the majority of assets in corporate bonds and Treasuries
  • It also selectively invests in TIPS, zero-coupon securities and bonds of quasi-sovereign entities when appropriate, thus taking advantage of the broadest opportunity set available in credit and government bond markets
  • Our investment process incorporates top-down and bottom-up decisions. We manage sector allocations to corporate and government bonds as well as duration and yield curve positioning at the team level. Portfolio managers make individual decisions on industry allocation, credit quality distribution and issuer selection
  • We manage duration primarily through our corporate and Treasury investments and selectively use Treasury zeros, TIPS, interest rate swaps and futures based on our analysis of relative value and efficiency of execution
  • Research is the cornerstone of our investment process. We construct portfolios by combining broad macroeconomic analysis and specific industry and credit evaluation
  • A research team is dedicated to providing macro insights in areas including U.S. economic research, duration and yield curve expectations, relative value comparisons among industries and on credit quality. This team also provides broad political, quantitative and regulatory insights — all necessary for the successful management of this strategy
  • Eighteen credit analysts, with input from their equity counterparts, support portfolio managers by providing their best insights for industry allocation and issuer selection
  • The combination of equity and fixed-income perspectives allows us to evaluate the entire capital structure of companies, enabling us to make optimal issuer and security selection
  • The portfolio management team consists of three portfolio managers: two managers focus on corporate bond selection and one focuses on duration and yield curve management and overall U.S. Treasury exposure
  • The Capital System℠ approach ensures diversity of investment ideas and full coverage of the opportunity set
  • Portfolio managers work closely with a team of dedicated traders to identify market anomalies, inefficiencies and capital flows — technical factors that can be exploited for more efficient trade execution
  • This strategy is also available as a “plus” strategy that incorporates high-yield and emerging markets debt with the goal of achieving higher excess returns
  • We have a comprehensive framework for addressing risk
    • Our research process and The Capital System help diversify the portfolio
    • Capital’s independent global investment control group monitors compliance with portfolio guidelines
    • Our legal and compliance team helps monitor for compliance with regulations in the markets in which we invest

History of Fixed Income at Capital Group


We began managing fixed-income assets for institutional clients in 1973, and Capital Fixed Income Investors has $284.3 billion in assets under management as of June 30, 2017.


Portfolio Management Team

 

 

 

 

 

 

View investment results data

 

 

 


Resources


Fund Characteristics

Defined Benefit Plans (PDF)

 

 

 


This material is designed for use solely by Qualified Purchasers, institutional investors and consultants. It may not be disseminated to or used by individual plan participants or retail investors.

The Capital Group companies manage equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

Any collective investment trusts (“CITs”) available under the strategy shown are maintained by Capital Bank and Trust Company (“trustee”), which has retained an affiliate to serve as investment adviser to the trustee for the CITs.

This information supplements or enhances required or recommended disclosure and presentation provisions of the GIPS® standards, which if not included herein, are available upon request. GIPS is a trademark owned by CFA Institute.

All data as of June 30, 2017, unless otherwise specified.

Returns are in USD. Periods greater than one year are annualized. Returns reflect the reinvestment of dividends, interest and other earnings.

Composite returns reflect the Capital Group Long Duration Government/ Credit Composite and Long Duration Government/Credit Plus Composite, as noted.

Composite returns are preliminary and net of withholding taxes on dividends, interest and capital gains. Actual withholding tax rates vary according to the country of denomination and tax status of each portfolio.

Composite net returns are calculated using the current highest management fees for institutional investors. Actual investment returns net of management fees may differ depending on, among other things, the applicable fee schedule and portfolio size.

Composite risk characteristics are preliminary and gross of management fees. The analysis is based on monthly data, and periods greater than one year are annualized.

Portfolio reflects Capital Group Representative Long Duration Government/Credit and Long Duration Government/Credit Plus Portfolio, as noted.

Global High Yield sector exposure reflects the Capital Group Global High- Income Opportunities Trust (US).

Cash & equivalents include short-term securities, accrued income and other assets less liabilities.

The “other” category may include equities, warrants, convertibles, preferreds, interest rate swaps and credit default swap indices.

Bloomberg Barclays U.S. Long Government/Credit Index refl Bloomberg Barclays U.S. Long Aggregate Bond Index from August 31,1998 to October 31, 2009 and Bloomberg Barclays U.S. Long Government/ Credit Index thereafter. Source: Bloomberg Index Services Ltd.

Each index is unmanaged.

Portfolio characteristics index values reflect PolyPaths analytics. Data for the portfolio and index use PolyPaths analytics engine calculation assumptions.

Totals may not reconcile due to rounding.

Securities offered through American Funds Distributors, Inc.

*Capital is an “active manager” that creates portfolios by selecting securities using fundamental research. The estimated excess return and tracking error numbers, shown gross of management fees, are based on a number of factors including our investment process, historical results and historical market conditions. We cannot provide any guarantee with respect to results or preservation of assets. The estimates provided should not be considered an assurance or guarantee of the risk or return of any portfolio or impose any liability on Capital.


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 or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing.