The Capital Advantage

Since 1931, Capital Group has been singularly focused on delivering superior, consistent results for long-term investors using high-conviction portfolios, rigorous research and individual accountability.

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Aligned with Investor Success

We base our decisions on a long-term perspective, which we believe aligns our goals with the interests of our clients. Achieving superior, long-term returns is our only goal, so managers are rewarded for their results, not the level of assets they manage. Collectively, Capital Group associates are significant investors in the company's investment offerings.

Our investment philosophy is based on doing what we believe is right for clients:
We reward long-term results
Compensation for investment professionals is heavily influenced by results over four- and eight-year periods.
We invest alongside you
Collectively, Capital Group associates are significant investors in the company's investment offerings.

Why it matters:

Our interests are deeply intertwined with those of clients.

"Another key to [Capital Group's] successful culture is its compensation structure. [Capital Group] pays performance bonuses to analysts and managers based on one-, four-, and eight-year records, with emphasis on the four-year and eight-year records. This isn't common in the mutual fund industry, where many firms emphasize shorter term performance, but it is a true competitive advantage." – Morningstar®, May 2011

The Capital SystemSM

With each investment offering, Capital Group begins by defining a clear investment objective and assembling a diverse team best equipped to pursue the universe of opportunities available.

Our investment process, The Capital System, is designed to enable individual investment professionals to act on their highest convictions, while limiting the risk associated with isolated decision-making.

Each portfolio is divided into portions that are managed independently by investment professionals with diverse backgrounds, ages and investment approaches.

Example: International Equity management team

The Complete Process

Investment analysts representing a variety of geographic regions and sector concentrations follow the universe of investment opportunities identified in the investment offering.

Pool of analyst coverage

The Complete Process

Portfolio managers – and, notably, analysts as well – are assigned a portion, or sleeve, of the overall investment offering to manage independently, enabling them to focus on their highest conviction ideas.

Highest conviction ideas

The Complete Process

The Capital System bears some resemblance to a team approach. But there's an important difference: While there may be group discussions, there are no group decisions.

Manager and analyst sleeves

The Complete Process

Overall portfolios are composed of individual managers' and analysts' highest conviction investment ideas. Combining the best independent decisions of experienced investment professionals into one portfolio results in diversification and creates the potential for superior results over time.

The Complete Process

The end result is a diversified portfolio composed of individual managers' and analysts' highest conviction investment ideas. Combining the experienced managers' best independent decisions that are consistent with the investment offering's specific objectives delivers a portfolio with the potential for superior results over time.

Diversified portfolio
For illustrative purposes only. In funds with research portfolios, analysts invest directly in a limited number of the companies they cover.

Governance

Multiple layers of oversight contribute
to rigorous risk controls

A multilayered governance structure oversees the system, enabling managers to act with confidence while managing their sleeve for optimum long-term results.

Governance

Managers & Analysts

Managers and analysts share information and opinions with their colleagues and challenge each other's decisions.

Governance

Principal investment officer or mandate manager

Accountable for:

  • Overall objectives and yield targets
  • Guiding risk management and distribution of assets among managers
Portfolio coordinating group

Group of senior executives at Capital accountable for:

  • Portfolio manager lineup and succession planning
  • Monitoring portfolio manager results
Fund board (for mutual funds only)

Independent trustees accountable for:

  • Holding management responsible for results
  • Setting fees and renewing contracts

Built to Last

As a private firm with an independent charter and robust balance sheet, we are able to invest in our capabilities through all markets, both good and bad. Our investment professionals are among the most experienced in the industry.

*Source: Morningstar®, as of December 31, 2012.
Portfolio manager and analyst data as of December 31, 2012.
The Capital Group companies manage equities through three investment divisions that 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.
Experience over cycles defines our stability
  • Our portfolio managers average 27 years of experience, including 21 years at our company.
  • The average tenure of a portfolio manager on a fund is 9.9 years; for the industry it's 5.7 years.*

Why it matters:

Generations of knowledge over multiple full market cycles provides our clients an experience advantage.

"In consulting and industry circles, stability of management is often considered the best measure of investment culture. ...Creating a healthy culture where very skilled and sought after investment professionals want to stay for their whole career is one of the hardest things to do in the money management world."

– Morningstar®, September 2012

46%

of our portfolio managers experienced the October 1987 crash

87%

of our fixed-income portfolio managers experienced the difficult 1994 bond market

100%

of our portfolio managers have more than 10 years of investment experience

Aligned with Investor Success >

We base our decisions on a long-term perspective, which we believe aligns our goals with the interests of our clients. Achieving superior, long-term returns is our only goal, so managers are rewarded for their results, not the level of assets they manage. Collectively, Capital Group associates are significant investors in the company's investment offerings.

The Capital SystemSM >

Our investment process, The Capital System, is designed to enable individual investment professionals to act on their highest convictions, while limiting the risk associated with isolated decision-making. Each portfolio is divided into portions that are managed independently by investment professionals with diverse backgrounds, ages and investment approaches. A disciplined, multilayered governance structure oversees the system's operation.

Built to Last >

As a private firm with an independent charter and robust balance sheet, we invest in improving our capabilities through good markets and bad. With one of the highest retention rates in the industry,* we have some of the most experienced investment professionals, a deep bench and a commitment to sustaining our investment process over generations.

*Source: Morningstar®, for the American Funds, as of December 31, 2012.
Based on percentage of portfolio managers who have stayed with the firm during the past five calendar years.