Emerging Markets Corporate Debt (Investment Grade) | Capital Group

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TOTAL RETURN FIXED INCOME

Emerging Markets Corporate Debt (Investment Grade)

Vehicle: Separate Account

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Overview

Objective: Seeks high total return, with a large current income component, by investing in fixed-income securities in developing countries.

  • Strategy inception date: 2012
  • Assets in strategy (millions): $185.6
  • Benchmark: JP Morgan CEMBI Broad Diversified Investment Grade
  • Currency (%)
    • USD allocation: 100
  • Minimum account size (millions):
    • Separate account: $100
  • Invests in:
    • Emerging markets debt
      • Corporate
      • Quasi-sovereign
  • Tracking error estimate (bps)*: 100–300
  • Excess return estimate (bps)*: 50–100
  • Sources of excess return estimates (%)
    • Country allocation: 40
    • Security selection: 60

Assets in strategy as of June 30, 2017.


Approach
  • Research is the cornerstone of our investment process, which integrates macroeconomic, fixed-income and equity analysis from all regions of the globe
  • An emerging markets debt analyst at Capital typically focuses on countries in a geographic area — for example, Latin America, Eastern Europe or Africa — to enhance their assessment of relative value and the characteristics of each market
  • 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
  • The Emerging Markets Corporate Debt strategy is guided by one portfolio manager
  • The portfolio manager looks for value in securities that feature solid or improving credit quality not yet recognized by the market and for which significant risk premiums are being paid by the issuer
  • 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 has $284.3 billion in assets under management as of June 30, 2017. Capital has more than 20 years’ experience investing in emerging markets. We began investing in emerging markets debt in 1991, had our first dedicated emerging markets debt account in 1994, and established a global high-yield strategy that combined emerging markets and U.S. high-yield debt in 1998.

 


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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.

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 Emerging Markets Corporate Debt Investment Grade 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 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.

Portfolio reflects Capital Group Representative Emerging Markets Corporate Debt (Investment Grade) Portfolio.

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

Index reflects JP Morgan CEMBI Broad Diversified Investment Grade. This report, and any product, index or fund referred to herein, is not sponsored, endorsed or promoted in any way by J.P. Morgan or any of its affiliates who provide no warranties whatsoever, express or implied, and shall have no liability to any prospective investor, in connection with this report. J.P. Morgan disclaimer http://www.jpmorgan.com/pages/jpmorgan/ib/girg.

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.