American Funds Capital World Bond Fund

Scorecard
3 / 5 Stars
Lipper
3 3 1 5 4
Zacks Investment Research
2 (Buy)
Standard & Poor's
4 / 5 Stars
TheStreet.com
D- (Sell)

U.S. News evaluated 98 World Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned 8.61 percent over the past year, 3.43 percent over the past three years, 5.80 percent over the past five years, and 5.72 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 5.8%
1 Year 8.6%
3 Years (Annualized) 3.4%
5 Years (Annualized) 5.8%
10 Years (Annualized) 5.7%

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Summary

The American Funds Capital World Bond Fund scours the globe in search of mostly investment-grade bonds. Management sticks mainly to safe government bonds, but it dabbles in corporate bonds.

As of July 03, 2014, the fund has assets totaling $13.16 billion. Its portfolio consists of holdings in mostly investment-grade or government bonds from all over the world.

During the worst of the recession, the fund suffered from its exposure to corporate bonds as investors sought safety in government debt. Coming out of the recession, the fund is broadly diversifed among region and asset class. Management has invested about 15  to 20 percent of its total assets invested in the emerging markets, according to Morningstar. Lately, the fund has benefited from the returns of its corporate bond holdings, which make up about a fifth of the fund's total assets as of June. The fund has returned 8.61 percent over the past year and 3.43 percent over the past three years.

As the name of the fund suggests, its holdings are well diversified throughout the world. Government debt from Western countries makes up a large part of the fund, but managers also maintain corporate holdings, high-yield, and emerging-market debt. Morningstar says the managers also make currency bets but recently moved to a benchmark that’s generally 50 percent exposed to the U.S. dollar. The fund has returned 5.80 percent over the past five years and 5.72 percent over the past decade.

Investment Strategy

The fund’s prospectus says that the managers invest “primarily in investment-grade bonds issued by entities based around the world and denominated in various currencies, including U.S. dollars.” Management also has the option to invest up to 25 percent of the fund in lower-quality and emerging-markets debt. The fund’s “objective is total return,” says Dale Hanks, vice president of Capital Research & Management, which manages the funds in the American Funds family. “That’s important as a distinction simply because most bond funds, at least our bonds funds, will have income as its primary objective.”

Role in Portfolio

Morningstar assigns the fund a “specialty” role in a portfolio.

Management

Like other American family funds, this one is run by a team of “counselors” instead of a single manager. The team consists of five portfolio managers from the fund’s adviser, Capital Research & Management.

Fees

American Funds Capital World Bond Fund has an expense ratio of 0.52 percent.

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Risk

The fund invests mostly in investment-grade bonds, but it maintains holdings in high-yield and emerging-markets debt and in corporate bonds that tend to be more volatile.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 3 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 3 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

In the annual Lipper/Barron’s Fund Families Survey of 2010, American Funds family ranks 49th out of 57 fund families surveyed.

Lipper

Morningstar gives this fund a stewardship rating of A on a scale of A to F. “This fund is supported by a fundholder-focused corporate culture and a fund board led by an independent chairman,” Morningstar says. “Its fees also are reasonable. Overall, it’s a strong steward of capital.”

Morningstar 2011-04-01

In the annual Lipper/Barron’s Fund Families Survey of 2010, American Funds family ranks 49th out of 57 fund families surveyed.

Lipper

Morningstar gives this fund a stewardship rating of A on a scale of A to F. “This fund is supported by a fundholder-focused corporate culture and a fund board led by an independent chairman,” Morningstar says. “Its fees also are reasonable. Overall, it’s a strong steward of capital.”

Morningstar 2011-04-01