US Core Fixed Income | Capital Group

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INCOME AND PRESERVATION

US Core Fixed Income

Vehicle: Collective Investment Trust, Separate Account

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Overview

Objective: Seeks high total return and capital conservation by investing in U.S. dollar–denominated fixed-income securities. 

  • Strategy inception date: 1973
  • Assets in strategy (billions): $83.4
  • Benchmark: Bloomberg Barclays U.S. Aggregate Bond Index
  • Duration range: +/– one year of benchmark duration
  • Maximum below-investment-grade bonds (%): 0
  • Invests in:
    • U.S. government securities
    • Corporate bonds
    • Securitized debt (ABS, CMBS and MBS)
  • Tracking error estimate (bps): 60–125
  • Excess return estimate (bps): 40–70
  • Sources of excess return estimates (%):
    • Sector allocation: 20
    • Security selection: 65
    • Duration: 15
  • Minimum account size (millions):
    • Collective Investment Trust: $5
    • Separate Account: $100

Assets in strategy as of June 30, 2017.

For a DC collective investment trust, plan size of $250 million may be used to satisfy the minimum account size requirement.


Approach
  • Research is the cornerstone of our investment process, which integrates macroeconomic, fixed-income and equity analysis from all regions of the globe
  • Each credit analyst specializes in one or more industries or sectors and thoroughly examines the individual issues within his or her coverage
  • A dedicated group is responsible for quantitative and qualitative analysis of securitized debt, including mortgage-backed and asset-backed securities
  • The fixed-income analysts also work with Capital’s equity research team. In addition, a strategic group is dedicated to currencies, asset allocation, quantitative research, politics and other macro issues
  • Our investment process incorporates top-down and bottom-up considerations. Top-down decisions are made regarding duration. The team also determines the allocations to government securities, corporate bonds and securitized debt
  • The allocations to the investment-grade sectors are an important source of potential excess return, while duration decisions are designed to have minimal impact on a portfolio’s relative returns
  • The portfolio manager seeks to add value by research-driven security selection
  • The portfolio manager also works closely with Capital’s traders, who provide valuable information about market anomalies, inefficiencies and deal flow in addition to executing trades
  • 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 make certain we adhere to 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 had over $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)

Defined Contribution Plans (PDF)

Endowments/Foundations (PDF)

 


Additional Reports

Annual Report (PDF)

Endowments/Foundations

Tax-Exempt Trusts Annual Report (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 this strategy 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 U.S. Core Fixed Income Composite.

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 of highest institutional fee results are calculated by deducting the current highest investment management fees that may be applicable to an institutional account in the composite from the gross results. Composite net of highest fee results are calculated by deducting the current highest investment management and advisory fees that may be applicable to certain accounts in the composite from the gross results.

Actual fees may vary 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 US Core Fixed Income Portfolio.

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.

U.S. Core Fixed Income Index reflects Bloomberg Barclays Government Credit Bond Index from December 31, 1972 to December 31, 1975 and Bloomberg Barclays U.S. Aggregate Bond Index thereafter.

Index reflects Bloomberg Barclays U.S. Aggregate Bond Index. 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.