A sound investment process and strong management team underpin Capital Group Core Bond ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in AA rated bonds and government bonds compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm a High Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's style-agnostic investment process evaluation looks for strategies that should be able to outperform their Morningstar Category index on a risk-adjusted basis over time. Capital Group Core Bond ETF earns a High Process Pillar rating.    The most significant contributor to the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.6 stars. The parent firm's five-year risk-adjusted success ratio of 65% also strengthens the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their commendable success ratio suggests that the firm does well for investors and that this fund may benefit from that. The firm's five-year retention rate of 86% contributes to the process as well.

 Compared with other funds in the Intermediate Core Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the average strategy in the category, the managers have been substantially underweight AA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AA rated bonds compared with Morningstar Category peers. Additionally, the fund has exhibited a notable sector bias away from government bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to government bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with one- to three-year maturities. In recent months, the strategy also had less exposure to debt with one- to three-year maturities compared to its peers.

  The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

High

Process

Capital Group Core Bond ETF earns an Above Average People Pillar rating. Pramod Atluri, the longest-tenured manager on the strategy, provides strong guidance, offering 21 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 5.0 stars, demonstrating stellar risk-adjusted performance. The team is small but adequately equipped, with two other supporting listed managers. Together, the three boast nine years of average listed portfolio management experience.  The management team is invested in the fund, but the maximum investment by any manager is between $100,000 and $500,000. An investment of more than $1 million would be ideal to align managers' interests with those of the fund's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

People

Capital Group’s adaptability while staying true to its identity maintains its High Parent rating.
The firm is under a new but familiar kind of leadership. Mike Gitlin, previously the head of fixed income and global trading, took over as CEO in October 2023. He replaced Tim Armour, who had been chairman and CEO since 2015. Rob Lovelace, the firm’s vice chair and president, also stepped off the management committee to pave the way for new leadership. Martin Romo and Jody Jonsson, who both head up an investment subsidiary, became chairman and CIO, and vice chair, respectively. Romo, Jonsson, and Lovelace retain their roles as principal investment officer on funds. The transition demonstrated a considered succession plan and a commitment to keeping the leadership team-oriented and investor-heavy.
Meanwhile, the firm has been thoughtful about other changes. Recognizing investor preferences, Capital since early 2022 has launched 14 exchange-traded funds—seven equity, six fixed income, and one allocation. The new funds, branded under the Capital Group name, are distinct from but rhyme with some of the legacy American Funds mutual funds. The firm also launched active-passive models with industry peers that leverage its mutual fund lineup. All these new investment options employ Capital’s time-tested investment philosophy, use its hallmark multimanager system, and draw from its huge pool of seasoned investors.

Parent

Capital Group Core Bond ETF

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