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.
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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). 2023 bars are as at 30 June 2023. 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.
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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 30 June 2023 in USD 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.
*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 30 June 2023 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 2020 (strategy inception) to 30 June 2023 in USD 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.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
23 years with Capital
23 years of industry experience
Shannon Ward
US High Yield
6 years with Capital
30 years of industry experience
Scott Sykes
US investment-grade corporates
17 years with Capital
22 years of industry experience
Kirstie Spence
Emerging markets debt
27 years with Capital
27 years of industry experience
Xavier Goss
Securitised credit
2 years with Capital
19 years of industry experience
Years of experience as at 31st December 2022.
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. We have also grown to become one of the world’s largest active fixed income fund managers.
Global investing credentials
US$2.5T
in total assets managed
26 years
average investment experience of our fixed income portfolio managers
US$498.0B
Fixed income assets managed*
*Assets under management by Capital Fixed Income Investors.
Data as at 31 December 2023
Capital Group Multi-Sector Income Fund (LUX)
We're here with the support and solutions you need.
Don't hesitate to reach out if you have questions or need assistance.
Marco Büchler
Managing Director
Financial Intermediaries
+41 (0) 44 567 8007
Marco.Buechler@capitalgroup.com
Jeremy Chapuis
Managing Director
Financial Intermediaries & Institutional
Suisse Romande
+41 (0) 22 807 4695
Jeremy.Chapuis@capitalgroup.com
Katja Wiechers
Managing Director
Financial Intermediaries
+41 (0) 44 567 8015
Katja.Wiechers@capitalgroup.com
Michael Stadelmann
Director
Financial Intermediaries
+41 (0) 44 567 8011
Michael.Stadelmann@capitalgroup.com
Melody Cattaneo
Associate Director
Financial Intermediaries & Institutional
Suisse Romande
+41 (0) 22 807 4009
Melody.Cattaneo@capitalgroup.com
Bozica Cuskic
Associate
Financial Intermediaries
+41 (0) 44 567 8016
Bozica.Cuskic@capitalgroup.com
Nadja Huber
Marketing Director
+41 (0) 44 567 8002
Nadja.Huber@capitalgroup.com
Claudia Fabini
Senior Client Manager
+41 (0) 44 567 8009
Claudia.Fabini@capitalgroup.com
Karin Krüger
Assistant
+41 (0) 44 567 8012
Karin.Krueger@capitalgroup.com
Rebecca Schwitter
Assistant
+41 (0) 44 567 8014
Rebecca.Schwitter@capitalgroup.com
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.
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.
- Some portfolios may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
- There are additional ABS/MBS, Bonds, Counterparty, Derivative instruments, Emerging markets, High yield bonds, Liquidity, Operational and Sustainability risks associated with this fund.
Fund risks
ABS/MBS risk: The fund may invest in mortgage- or asset-backed securities. The underlying borrowers of these securities may not be able to pay back the full amount that they owe, which may result in losses to the fund.
Bonds risk: The value of bonds can change as a result of interest rate changes – typically when interest rates rise, bond values fall. Funds investing in bonds are exposed to credit risk. A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless.
Counterparty risk: Other financial institutions provide services to the fund such as safekeeping of assets, or may serve as a counterparty to financial contracts such as derivatives. There is a risk the counterparty will not meet their obligations.
Derivative instruments risk: Derivatives are financial instruments deriving their value from an underlying asset and may be used to hedge existing exposures or to gain economic exposure. A derivative instrument may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
Emerging markets risk: Investments in emerging markets are generally more sensitive to risk events such as changes in the economic, political, fiscal and legal environment.
High yield bonds risk: Lower rated or unrated debt securities, including high yield bonds, may, as a result, be subject to liquidity, volatility, default and counterparty risk.
Liquidity risk: In stressed market conditions, certain securities held by the fund may not be able to be sold at full value, or at all. This could cause the fund to defer or suspend redemptions of its shares, meaning investors may not have immediate access to their investment.
Operational risk: The risk of potential loss resulting from inadequate or failed internal processes, people and systems or from external events.
Sustainability risk: Environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment of the fund.
All data as at 31 December 2023 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