We’re late in the economic cycle.
The tailwind to asset prices from central bank policies is fading.
Trade tensions have increased.
Core Fixed Income Funds
Source: Morningstar. As of 12/31/18. According to Morningstar's Best Fit Index, applied to Morningstar Intermediate-Term Bond category. Funds examined are the top-quartile for trailing three-year average annual returns. Morningstar's Best Fit Index definition: The market index that shows the highest correlation with a fund's returns over the most recent 36-month period. This analysis, therefore, indicates that only 12% of top-quartile of funds in this Morningstar category were actually most highly correlated to core bonds. Totals may not reconcile due to rounding.
Source: Morningstar. Data as of 12/31/18. Correlation between returns for Standard & Poor’s 500 Composite Index and respective fund results (F-2 share class). Three-year correlation for all funds, except American Funds Strategic Bond Fund, where correlation shown is for the period 4/1/16 (beginning of first full month after fund inception on 3/18/16) through 12/31/18.
CORRELATION: A statistical measure of how two securities move in relation to each other. A correlation ranges from -1 to 1. A positive correlation close to 1 implies that as one security moves, either up or down, the other security will move in “lockstep,” in the same direction. A negative correlation close to -1 indicates that the securities have moved in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random.
Investments are not FDIC-insured, nor are they deposits of nor guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
Content contained herein is not intended to serve as impartial investment or fiduciary advice. The content has been developed by Capital Group, which receives fees for managing, distributing and/or servicing its investments.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries.
Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional cash securities, such as stocks and bonds.
Income from municipal bonds may be subject to state or local income taxes and/or the federal alternative minimum tax. Certain other income, as well as capital gain distributions, may be taxable.
S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. Standard & Poor's 500 Composite Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2019 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC.
© 2019 Morningstar, Inc. All Rights Reserved. Some of the information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar, its content providers nor the American Funds are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by American Funds.