US High Yield | Capital Group

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TOTAL RETURN FIXED INCOME

US High Yield

Vehicle: Collective Investment Trust, Separate Account

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Overview

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

  • Strategy inception date: 1984
  • Assets in strategy (billions): $19.6
  • Benchmark: Bloomberg Barclays U.S. Corp. High-Yield Index, 2% Issuer Cap
  • Maximum below-investment-grade bonds (%): 100
  • Currency (%):
    • USD allocation: 100
  • Invests in:
    • U.S. corporate bonds
    • May own non-U.S. high-yield corporate debt, investment-grade corporate debt, convertible securities, high-yield preferred stock and bank loans.
  • Tracking error estimate (bps)*: 200–350
  • Excess return estimate (bps)*: 50–150
  • Sources of excess return estimates (%):
    • Sector/Industry allocation: 20
    • Security selection: 80
  • 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 Capital’s investment process, which integrates macroeconomic, fixed-income and equity analysis from all regions of the globe
  • Our fixed-income analysts leverage our integrated approach, drawing on the work of their counterparts in our equity research group. Bond analysts typically specialize in one or more industries and/or sectors, which cover the full quality spectrum from investment-grade to high yield
  • A strategic group is also dedicated to currencies, asset allocation, quantitative research, politics, and other macro issues
  • The portfolio manager looks for companies with improving credit outlooks as well as companies with good credit fundamentals that the market may be undervaluing. After an issuer has been identified, the portfolio manager then determines the best risk-adjusted value in its capital structure
  • The research analysts are assigned a portion of the portfolio to manage, with each analyst responsible for securities within his or her industry coverage. Analysts look both at the creditworthiness and the relative value of securities within the marketplace
  • The portfolio managers work closely with Capital’s traders, who provide valuable information about market anomalies, inefficiencies and deal flow in addition to executing trades
  • Capital's research process is our best risk control
    • The Capital System℠ naturally creates diversification within the portfolio
    • Our 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 $284.3 billion in assets under management as of June 30, 2017. We began managing high-yield bonds in 1988 for retail clients (with American High-Income Trust®, a U.S. mutual fund), and in 1999 for institutional clients.

 


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)

 


Profile

US High Yield Profile (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. High-Yield 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 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.

Composite risk characteristics are 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 High-Yield Portfolio.

Top Five Issuers are for a representative account and may not reflect actual holdings within the US High-Yield strategy.

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.

Index reflects Citigroup Long-Term High-Yield Index to December 31, 1985, Credit Suisse High-Yield Index to December 31, 1992 and Bloomberg Barclays U.S. Corporate High-Yield Index, 2% Issuer Cap thereafter. 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.