A sound investment process and strong management team underpin Capital Group Core Equity ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the lowest 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 an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. 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

Microsoft

Broadcom

Amazon

Alphabet

Mastercard

General Electric

Abbott Labs

UnitedHealth Group

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Capital Group Core Equity ETF earns a High Process Pillar rating. 

The primary contributor to the rating is its parent firm's superior 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 influences the rating. 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 respectable 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 rating as well.

 This strategy leans toward smaller, higher-growth companies compared with its average peer in the Large Blend Morningstar Category. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. This orientation tends to pay off most prominently when markets are hot. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. This strategy also has tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over these years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in industrials by 6.7 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are technology and consumer defensive, with technology underweighting the average portfolio by 3.1 percentage points of assets and consumer defensive similar to the average. The strategy owns 125 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 34.7% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 48.8% average. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 34% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

Capital Group Core Equity ETF earns an Above Average People Pillar rating. Donald D. O'Neal, the longest-tenured manager on the strategy, provides strong guidance, offering over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.4 stars, demonstrating encouraging risk-adjusted performance. A large cast of five additional named managers adds to the team's appeal, averaging 18 years of listed portfolio management experience. As a team, they manage seven investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. The highest personal investment in this offering by any of its managers is at least $1 million. An investment of that size is large enough to align managers' interests with 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 Equity ETF

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