Are you considering making moves in fixed income? A new year looms, and with it, many investors are reassessing their bond holdings. Is now the time to add duration or to stay shorter term? Should investors lean into global high yield bonds, emerging markets debt, securitized credit, or move their cash into steadier, investment-grade corporate offerings? Active bond ETFs may be the answer for a few key reasons.
First, active managers scrutinize individual bonds or debt securities closely identifying the most promising securities among thousands of offerings. That can help, given the many attributes that undergird firms’ credit outlooks. Passive managers tend to follow indexes with often stringent rules, which can limit flexibility. Timeliness is a benefit in many situations, which would also point to Active ETFs.
Taken together, an asset manager with strong global research and investing capabilities can be a differentiator in fixed income. Capital Group offers a strong case due to its deep, global research effort and distinctive approach to active investment called The Capital System.
At the heart of the Capital System is a multi-manager structure that divides investment portfolios into segments with each one run by an individual manager. The multi-manager structure combines diversity of thinking with high-conviction decision-making.
The Capital Group Multi-Sector Income Select ETF (CAPM) enables investors to access the Capital System and the global organization’s more than 50 years of experience investing in bonds. The global bond ETF looks to provide a high level of current income via a combination of high yield and corporate bonds and other securities, including emerging markets bonds and securitized debt. Plus, portfolio managers have the flexibility to adjust exposures to each underlying bond sector based on research, market conditions and outlooks. For a secondary objective, the strategy targets capital appreciation. CAPM and the Capital System may be intriguing for those looking for active global fixed income exposure to a range of bond sectors.