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

 The strategy’s management team earns a High People Pillar rating. The strategy's effective investment approach earns a High Process 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 Municipal Income ETF earns a High Process Pillar rating.    The leading factor in 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 69% also supports 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 compelling 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 85% supports the process as well.

 Compared with other funds in the Muni National Interm 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. Relative to the average strategy in the category, the managers have been underweight A rated bonds in recent years. In the latest month, the strategy has also relatively underweighted A rated bonds compared with Morningstar Category peers. Additionally, the managers have exhibited a notable sector bias towards government bonds over the past few years. Compared with category peers, the strategy had more exposure to government bonds in the most recent month. Finally, during the past few years, the fund leaned towards debt with 10- to 15-year maturities. In this month, the strategy also leaned more towards debt with 10- to 15-year maturities compared with its peers.

 This strategy's 12-month yield is 3.2%, higher than its average peer's 2.8%. It also has a 3.4% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, higher yields come at the cost of higher credit risk. The portfolio has a lower average credit rating of BBB, compared with the category average's A and 6% of the fund's assets are rated non-investment-grade, compared to its peers' 1%. Strategies that take on more credit risk tend to be at their best when markets are as well. This risk contributes to strong performance during bull markets at the cost of losing more on the downside.

High

Process

Capital Group Municipal Income ETF earns a High People Pillar rating. The team is backed by Jerome H. Solomon, the longest-tenured manager on the strategy, who brings 11 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, reflecting below-average risk-adjusted performance relative to category peers. The team is small but adequately equipped, with two other supporting listed managers. Together, the three boast seven years of average listed portfolio management experience.  At least one member of the team has invested $1 million or more of their own capital in the fund, which helps align their interests with the strategy'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.

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 Municipal Income ETF

CGMU is an actively managed portfolio of US municipal bonds of varying maturities, exempt from regular federal income tax.

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News for Capital Group Municipal Income ETF ETF (CGMU)