Capital Group Dividend Value ETF's CGDV experienced managers and disciplined approach earn it a Morningstar Medalist Rating of Silver. 

In February 2022, Capital Group, the parent of American Funds, launched its first tranches of active ETFs including this one, which have some of the same characteristics as the firm’s long-standing mutual funds. Like those, this strategy uses the firm's characteristic multimanager approach and is in the hands of firm veterans. Five named managers run individual sleeves here, each with at least 22 years of experience at the firm, and they have the latitude to pursue their best ideas. Chris Buchbinder heads up the strategy and has more than 27 years of investment experience, serving as a manager here since 2007.

Income drives this strategy's guidelines, but it does have some flexibility in investing in nondividend payers. In aiming for a dividend yield before fees that is 30% greater than the S&P 500, the fund mostly sticks to U.S. investment-grade companies with a long history of paying dividends. In fact, the majority of firms have paid dividends in every year the past 10 years. This includes top-five holdings Broadcom AVGO, Raytheon Technologies RTX, and Microsoft MSFT. The managers can also allocate a small portion of the fund’s assets to nondividend payers that typically have strong balance sheets such as Netflix NFLX.

This fund tracks the firm's Capital Group Dividend Value composite, which goes back to 2001. Since Buchbinder joined the strategy in October 2007 through March 2023, its 8.0% annualized gross gain bested the Russell 1000 Value Index's 6.4% and outperformed the large-value Morningstar Category norm's 6.0%, but it lagged its prospectus benchmark, the S&P 500 by 70 basis points. It has bounced around being more correlated to the S&P 500 and Russell 1000 Value Index at times, but recently it has been more correlated to the value index. 

Its 0.33% net expense ratio places it among the large-value category's cheapest actively managed funds, and its structure is more tax-advantaged than a mutual fund, making it a solid option.

Analyst Rating

A solid income-oriented approach.

Senior Analyst

Stephen Welch

Broadcom

Raytheon Technologies

General Electric

Microsoft

Philip Morris

Carrier Global

Abbott Labs

Linde

This fund’s inclusion requirements have proved their worth and merit an Above Average Process rating. 

Five disclosed managers and one analyst team run separate portfolio sleeves here. Dividing the portfolio into separately run sleeves allows managers to stick with their highest-conviction picks and permits the strategy to benefit from varied market conditions. However, potential investments must clear several hurdles to be included in the portfolio. 

The fund's requirements center on income. In aiming for a dividend yield before fees that is 30% greater than the S&P 500, the fund mostly sticks to U.S. investment-grade companies with a long history of paying dividends. In fact, the majority of firms have paid dividends in every year the past 10 years. This includes top-five holdings Broadcom AVGO, Raytheon Technologies RTX, and Microsoft MSFT. 

Still, the managers do have some flexibility to invest outside those guidelines. Managers can invest up to 10% of the fund’s assets to nondividend payers that combine ongoing superior profitability with modest leverage relative to industry peers. Communication-services companies Meta Platforms META and Netflix NFLX fall into this category. They can also invest up to 10% of assets in non-U.S. companies. Typically, the managers like to stick with large multinational companies that don't have great U.S. counterparts, like chemical firm Linde.

Above Average

Process

This fund benefits from the strengths of American Funds' multimanager system and its managers’ decades of experience. It warrants an Above Average People rating.

While this ETF only launched in early 2022, it’s in the hands of firm veterans. This fund tracks the Capital Group Dividend Value composite, which goes back to 2001. Five named managers run individual sleeves here, each with at least 22 years of experience at Capital Group, the parent of American Funds. 

The strategy leverages one of Capital Group's equity subsidiaries, Capital Research Global Investors. Chris Buchbinder heads up the team, which includes James Lovelace, James Terrile, Martin Jacobs, and Keiko McKibben. Buchbinder and Lovelace have been on the strategy since late 2007. Terrile joined the strategy in 2012. While McKibben and Jacobs only joined in 2019 and 2021, respectively, they each have roughly 30 years of industry experience. Diversity of investment styles is a strength here as each manager can ply their unique approach to this large-value category mandate. The CRGI team draws on about 50 analysts, some of whom oversee their own slices of the portfolio.

Relative to other Capital Group strategies, manager investment could be better, but that should increase as this is a relatively nascent offering. Only one manager has more than $1 million invested here.

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.

High

Parent

Capital Group Dividend Value ETF

CGDV is an actively managed fund that primarily invests in stocks of dividend-paying, large- and mid-cap US companies. The fund seeks to produce income exceeding the average yield on US stocks.

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CGDV is a U.S. large-cap equity fund with a slight dividend and value tilt. CGDV has outperformed since inception, and quite significantly so. It has stronger returns than the S&P 500 and most dividend ETFs, including SCHD. It only yields 1.5%, but is moderately cheaper than average.

CGDV: Strong Value ETF, Outstanding Performance, Below-Average Valuation

CGDV only has a short two-year track record, but this actively managed ETF has already demonstrated it's possible for dividend strategies to outperform the broader market. While CGDV lacks the downside protection offered by many peers in the large-cap value ETF category, it's one of the few to offer nearly 10% estimated earnings per share growth. This feature means dividend ETF investors don't necessarily have to sacrifice total returns for income, though CGDV's modest 1.81% expected dividend yield is not competitive.

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Capital Group Dividend Value ETF is an actively managed ETF that focuses on dividend-paying common stocks of established U.S. companies. The CGDV ETF aims to generate steady income that surpasses the mean yield of the S&P 500 and primarily targets businesses with a proven track record of dividend payments.

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CGDV offers an active take on the value factor with an income ingredient. CGDV delivers an interesting factor story, but certainly not for value or dividend maximalists, since it has exposure to numerous richly priced stocks. I appreciate the fund's strong quality characteristics coupled with its remarkable performance since inception.

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CGDV ETF: A Competent ETF, But Not Quite A Buy

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CGDV is an actively managed dividend ETF that outperformed SPY in 2022 and has kept pace in 2023, an impressive feat given how growth stocks have dominated much of the year. With a February 2022 launch date, CGDV has already amassed over $3 billion in assets under management. Its unique multi-manager structure is a key selling point. CGDV's five managers have a diverse set of backgrounds, areas of expertise, and styles that should help mitigate losses in case market conditions change quickly.

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The US economy is not reacting strongly to the Fed's rate hikes, leading to an unsustainable trajectory, with growth securities outperforming value securities in H1 2023. CGDV could serve as a unique hybrid between growth and value, and could provide investors with a stable income source not directly tied to inflation. CGDV's top holdings, Broadcom and Microsoft, could contribute significantly to the ETF's momentum in the long term, despite risks from growth stock overvaluation and rallying in H2 2023.

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TORONTO--(BUSINESS WIRE)---- $CGDV #CIGAM--CI Global Asset Management announces estimated reinvested distributions related to the upcoming mergers of certain ETFs on or about March 31, 2023.

CI Global Asset Management Announces Estimated Reinvested Distributions in Connection with ETF Mergers

TORONTO--(BUSINESS WIRE)---- $CGDV #CIFinancial--CI Global Asset Management announces it has received investor approval to merge three ETFs into CI Global Minimum Downside Volatility Index ETF.

News for Capital Group Dividend Value ETF ETF (CGDV)