MARKET COMMENTARY | September 2015
INVESTMENT INSIGHTS | September 2015 | FEATURING Stephen Green & Andrew H. Dougherty
The Rise and Fall of China’s Stock Market
A sharp selloff in China’s stock market, a surprise currency devaluation and a persistent slowdown in economic activity have raised doubts about the ability of the world’s second-largest economy to maintain the hypergrowth levels of the past two decades.
Against this backdrop, economist Stephen Green and China affairs specialist Andrew Dougherty discuss:
INVESTMENT INSIGHTS | August 2015 | FEATURING Hilda L. Applbaum
In a Low-Yield Environment, Income Stocks Remain in Demand
With central banks around the world aggressively suppressing interest rates, the challenge of finding reliable income-producing investments has never been greater. Few investors are more familiar with this dilemma than portfolio manager Hilda Applbaum, the principal investment officer of The Income Fund of America®. In this conversation, Hilda shares her perspective on:
A portfolio manager discusses the recent evolution among some Japanese companies toward a more shareholder-friendly management strategy.
INVESTMENT INSIGHTS | March 2015
Moving Up the S-Curve
INVESTMENT INSIGHTS | February 2015
It Isn’t Just Shale: Oil Production Growth Is a Global Phenomenon
In 2014, oil prices posted their largest annual decline since the global financial crisis, losing more than 45% as weaker demand and strong global crude output created a supply glut. The collapse saw prices at a five–year low, battering energy shares — which finished 2014 nearly 13% lower — and weighing heavily on financial markets in oil–exporting countries. In our view:
INVESTMENT INSIGHTS | January 2015 | FEATURING Frank C. Hu
Oil Companies Have Been a Healthy Source of Dividends Globally
Over the last few years, large oil and gas companies have been among the biggest payers of dividends. Clearly the decline in oil prices is concerning because in most cases, it means that dividends cannot be fully funded from free cash flow. But I believe that, for the large integrated oil companies, the oil price would have to fall a lot further to call into question their ability to pay and increase their dividends.
INVESTMENT INSIGHTS | January 2015 | FEATURING David A. Hoag & Ritchie Tuazon
David: Investors will always have specific needs that have to be satisfied, and having an investment that seeks to mitigate inflation risk is just something that has to be in the tool chest. Whether inflation is going up, down or sideways, this is a timeless issue that we’re happy we can now explicitly address within individual client portfolios.
Ritchie: Internally, we see our fixed income offerings as tools for advisors and clients. Think about a set of golf clubs, for example. Maybe you never use a nine iron, until that day you decide that a shot requires one. The availability of American Funds Linked Bond Fund helps complete an investment set for investment professionals and shareholders. Whether or not inflation is a core investment theme for a given investor right now, it can make sense in some measure for almost all investors.
MARKET COMMENTARY | November 2014 | FEATURING Jay Markowitz & Jonathan Knowles
The Drug Pipeline Appears Healthier
Breakthrough drugs transform medicine and the health care investment landscape.
INVESTMENT INSIGHTS | September 2014 | FEATURING Jim B. Lovelace & Gregory D. Johnson
Equities Are Working Harder Due to Low Bond Yields
Capital Income Builder® (CIB) and American Balanced Fund® (AMBAL) are two funds for which the principal investment officer plays a role in the overall asset allocation of the fund. Jim Lovelace plays this role for CIB and Greg Johnson for AMBAL. In this Q&A, they talk about the challenge of investing in an environment in which very little income is being generated by bonds, many dividend-paying stocks have high valuations, and non-U.S. equities appear to be more attractive than the U.S. market overall.
INVESTMENT INSIGHTS | April 2014 | FEATURING Andrew Suzman
INVESTMENT INSIGHTS | April 2014
INVESTMENT INSIGHTS | October 2013 | FEATURING Mark Denning
Mark Denning, a portfolio manager in American Funds EuroPacific Growth Fund and other funds, shares his views on Europe’s recovering economy and how he prefers domestically oriented European companies. He also discusses:
INVESTMENT INSIGHTS | September 2013 | FEATURING Alan N. Berro
Portfolio manager Alan Berro shares his views on the U.S. stock market and why he remains optimistic despite a rising rate environment. As an income-oriented investor, he is finding investment opportunities in pharmaceuticals, technology and industrials and is not that enthusiastic about traditional dividend payers. He also discusses:
INVESTMENT INSIGHTS | August 2013 | FEATURING Joyce E. Gordon
Portfolio manager Joyce Gordon tackles the challenge of finding yield in today’s market, where many traditional dividend-paying stocks have risen sharply, making valuations more expensive. She is finding newer sources of dividend growth, such as technology companies, as well as attractive opportunities outside the U.S. She is also bracing for higher U.S. interest rates and the implications for funds such as Capital Income Builder and American Mutual Fund.
U.S. economic growth has been steady, corporate earnings are strong and the equity market is at record highs. As an investor, what does all of this say to you about the U.S.?
U.S. companies are in terrific financial shape; they have a lot of cash on their balance sheets and many are increasing their dividends. It continues to be a good environment for U.S. equities, largely driven by the ongoing rebound in the housing and auto markets. Another area that looks attractive is industrials, where many firms are gaining strength and starting to increase their dividends.
INVESTMENT INSIGHTS | July 2013 | FEATURING Steve T. Watson
A flood of assets into higher yielding equities and a slowdown in economic growth in China are two of the major issues shaking the confidence of global investors. Portfolio manager Steve Watson explains how a contrarian approach to the market can help uncover opportunities even when investors are most doubtful.
As a manager in several dividend-focused funds, particularly International Growth and Income Fund, where are you currently finding value among dividend-paying companies?
Insurance companies have done very well over the past few months. The insurance companies were hurt by being part of the financials sector during the global financial crisis, even though their business models were much more robust than their share prices indicated.
INVESTMENT INSIGHTS | March 2012
The top-yielding quintile of the Standard & Poor’s 500 Composite Index had the worst returns in 2009 and the best returns in 2011. We are often asked the question, “Where do these stocks go from here?” While there may be some value in trying to time an entry point into dividend-focused strategies, there is only so far one can go with that approach; we believe it is best to take a strategic, long-term approach to dividend investing.
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 funds’ characteristics statement, which can be obtained from a financial professional or your relationship manager, and should be read carefully before investing.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
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.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. While not directly correlated to changes in interest rates, the values of inflation linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries.
Past results are not predictive of results in future periods.