Winners rationale

With no end in sight to the low rate environment, investors in search of yield are finding it increasingly challenging to strike a balance between returns, income and risks. This makes Capital Group stand out, with its focus on the higher-yielding part of the fixed income universe.

Part of the success can be attributed to one of the firm’s flagship strategies — Capital Group Global High Income Opportunities (LUX). It was designed to address investors’ need for income in a low interest rate environment, and has successfully fulfilled this role for more than two decades.

Using the right ingredients in the correct combination, the strategy has diverse components: high-yield corporate bonds, hard-currency EM debt, local-currency EM debt, and – more recently – hard-currency EM corporates. All these asset classes have proven rather rewarding over time.

To illustrate its performance: the strategy has a long track record of high income, including an annual average of 7.4% over the last 10 years. For the 12 months ended 31 August 2020, it returned 8.0% before fees in US dollar terms. For the three- and five-year periods, the fund returned 5.4% and 7.8%, respectively, before fees on an annualised basis.

Nimbly swifting positions benefited Capital Group in 2020. When markets saw a significant sell-off in March, the investment team decided to take advantage of both the valuation shifts and the extreme illiquidity. Opportunities included some metals and mining companies, and chemical companies in the high-yield universe. These were hit hard by fears of recession. Those ideas began to perform afterwards, and over two or three months, the overall effect was significant.

Another key difference in the firm’s investment process is that the credit analysts not only provide investment ideas to portfolio managers, but are able to act on the courage of their convictions and invest. This commitment to having credit analysts manage assets makes the roles more attractive, which helped the firm attract and retain the best talent in 2020.

Dedication and commitment to helping the region’s high net worth clients build stronger credit portfolios differentiated Capital Group from its peers, making it Asia Private Banker’s Best Fund Provider – Global bond for 2021.