Portfolio Construction | American Funds
PORTFOLIO CONSTRUCTION

Making portfolios
personal.

why capital group?

I can align my clients' investments with their goals.

Our portfolio construction approach focuses on objective-driven design, flexible execution, and targeted solutions to help your clients reach their individual goals.

investor goals

build wealth

build wealth

spend wealth

build wealth

conserve wealth

build wealth

Investment Objectives

Growth

Long-term growth of capital

Growth and income

Long-term growth of capital and income

Distribution income

Current income, long-term growth of capital and conservation of capital

Preservation and income

Current income and capital preservation

CONSULTING

I can add value to my clients' portfolios.

Your consultation from Capital Group's Portfolio Consulting and Analytics team features:

Personal consultation

A one-on-one consultation to discuss your specific questions surrounding your client portfolios.

Portfolio analysis

Customized suggestions for how your portfolios can help achieve client goals.

Ongoing engagement

Resources and support for your current — and future — portfolio construction needs.

"This is exactly what I'm looking for... a process I can have confidence in, a story I can tell, and something I can easily manage."

- FINANCIAL ADVISOR, NATIONAL FIRM

Contact Us

Ask for a Capital Group Portfolio Analysis.

OUR APPROACH

Focus on investor goals.

BETTER INVESTOR OUTCOMES

We build individual strategies for distinct investment objectives, forming a spectrum that aligns to a range of investor goals.

We give fund managers the flexibility, subject to fund guidelines, to move across geography, industry and market cap in pursuit of their objective.

We combine individual strategies to design targeted solutions so they work together to pursue the desired portfolio outcome.

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Objective-Driven Design​

I can build real-life portfolios.

While style-based allocations may provide some level of diversification, as seen in

the clustering of MSCI indexes below, our objective-based funds have allowed for a greater

range of risk and return. Read important investment disclosure.

​Average return and volatility based on rolling 10-year monthly periods for the 40 years ended December 31, 2017.

Source: Capital Group. American Funds sample includes U.S.-focused funds with at least four decades of history. For categories with multiple funds, average annualized return is a simple arithmetic average of rolling 10-year monthly average annual total returns (annualized), while annualized standard deviation of returns measures the standard deviation of monthly returns (also annualized). For more information and current results, click on the above fund name.Click here for index descriptions. 

Objective-Driven Design​

I can build real-life portfolios.

While style-based allocations may provide some level of diversification, as seen in

the clustering of MSCI indexes below, our objective-based funds allowed for a greater

range of risk and return. Read important investment disclosure.

​Average return and volatility based on rolling 10-year monthly periods for the 40 years ended December 31, 2017.

Source: Capital Group. American Funds sample includes U.S.-focused funds with at least four decades of history. For categories with multiple funds, average annualized return is a simple arithmetic average of rolling 10-year monthly average annual total returns (annualized), while annualized standard deviation of returns measures the standard deviation of monthly returns (also annualized). For more information and current results, click on the above fund name.Click here for index descriptions. 

Objective-Driven Design​

I can build real-life portfolios.

While style-based allocations may provide some level of diversification, as seen in the clustering of MSCI indexes below, our objective-based funds allowed for a greater range of risk and return. Read important investment disclosure.

​Average return and volatility based on rolling 10-year monthly periods for the 40 years ended December 31, 2017.

Source: Capital Group. American Funds sample includes U.S.-focused funds with at least four decades of history. For categories with multiple funds, average annualized return is a simple arithmetic average of rolling 10-year monthly average annual total returns (annualized), while annualized standard deviation of returns measures the standard deviation of monthly returns (also annualized). For more information and current results, click on the above fund name.Click here for index descriptions. 

Index descriptions

Bloomberg Barclays U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and consists of U.S. Treasury and government related bonds, corporate securities and asset-backed securities.


MSCI USA Index is a free float-adjusted, market capitalization-weighted index that is designed to measure the U.S. portion of the world market. This index is unmanaged and includes reinvested dividends and/or distributions, but does not reflect sales charges, commissions, expenses or taxes.


MSCI USA Growth Index captures large- and mid-cap securities exhibiting overall growth style characteristics in the U.S. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend and long-term historical sales per share growth trend.


MSCI USA Value Index captures large- and mid-cap U.S. securities exhibiting overall value style characteristics. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.


Standard & Poor’s 500 Index is a market capitalization-weighted index based on the average weighted results of approximately 500 widely held common stocks.


Bloomberg® is a trademark of Bloomberg Finance L.P. (collectively with its affiliates, “Bloomberg”). Barclays® is a trademark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Neither Bloomberg nor Barclays approves or endorses this material, guarantees the accuracy or completeness of any information herein and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.


MSCI has not approved, reviewed or produced this report, makes no express or implied warranties or representations and is not liable whatsoever for any data in the report. You may not redistribute the MSCI data or use it as a basis for other indices or investment products.


The S&P 500 is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2018 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 is prohibited without written permission of S&P Dow Jones Indices LLC.


The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.

flexible execution

Allow flexibility for results.

Flexible fund mandates provide our portfolio managers a broad opportunity set to help improve investor outcomes. See how geographic flexibility impacts a fund's return compared to its benchmark below. Read important investment disclosure.

Relative results vs. fund benchmark, 2004-2017

​These equity-focused American Funds have prospectuses that allow portfolio managers to take security positions outside the fund’s primary benchmark weightings.

​Attribution results are for each fund’s primary benchmark: Standard & Poor’s 500 Composite Index (Fundamental Investors, The Growth Fund of America, The New Economy

Fund), MSCI All Country World Index (Capital World Growth and Income Fund, New Perspective Fund), MSCI All Country World Small Cap Index (SMALLCAP World Fund), MSCI

ACWI (New World Fund) and MSCI ACWI ex USA (EuroPacific Growth Fund). Geographic allocation within each fund fluctuated throughout the time period shown.

1Data was collected beginning in January 2004 and ending in December 2017. The chart shows the longest available time period.

2The net excess return is the sum of the above benchmark results minus the below benchmark results.

1Other factors include cash — which is a negative drag on a 100% invested portfolio in up markets; and residual — to which undisclosed securities, differences in valuation of certain of international securities and intraday transactions contribute.

Relative results vs. fund benchmark, 2004-2017

​These equity-focused American Funds have prospectuses that allow portfolio managers to take security positions outside the fund’s primary benchmark weightings.​​

Attribution results are for each fund’s primary benchmark: Standard & Poor’s 500 Composite Index (Fundamental Investors, The Growth Fund

of America, The New Economy Fund), MSCI All Country World Index (Capital World Growth and Income Fund, New Perspective Fund), MSCI All Country World Small Cap Index (SMALLCAP World Fund), MSCI ACWI (New World Fund) and MSCI ACWI ex USA (EuroPacific Growth Fund). Geographic allocation within each fund fluctuated throughout the time period shown.

1Data was collected beginning in January 2004 and ending in December 2017. The chart shows the longest available time period.​​

2The net excess return is the sum of the above benchmark results minus the below benchmark results.​​

3Other factors include cash — which is a negative drag on a 100% invested portfolio in up markets; and residual — to which undisclosed securities, differences in valuation of certain of international securities and intraday transactions contribute.

​When a fund’s variation from its index’s geographic allocation was a headwind, the fund manager’s ability to select

from a broad universe of securities — both inside and outside the U.S. — helped the fund outpace its index.

Relative results vs. fund benchmark, 2004-2017

​These equity-focused American Funds have prospectuses that allow portfolio managers to take security positions outside the fund’s primary benchmark weightings.

​Attribution results are for each fund’s primary benchmark: Standard & Poor’s 500 Composite Index (Fundamental Investors, The Growth Fund of America, The New Economy

Fund), MSCI All Country World Index (Capital World Growth and Income Fund, New Perspective Fund), MSCI All Country World Small Cap Index (SMALLCAP World Fund), MSCI

ACWI (New World Fund) and MSCI ACWI ex USA (EuroPacific Growth Fund). Geographic allocation within each fund fluctuated throughout the time period shown.

1Data was collected beginning in January 2004 and ending in December 2017. The chart shows the longest available time period.

2The net excess return is the sum of the above benchmark results minus the below benchmark results.

1Other factors include cash — which is a negative drag on a 100% invested portfolio in up markets; and residual — to which undisclosed securities, differences in valuation of certain of international securities and intraday transactions contribute.

Targeted Solutions

I can create portfolios tailored to my clients' dreams.

Compose a portfolio of funds that is designed to pursue specific investment objectives and align with client goals, like growth and income in retirement.

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​Meet Claudia & Chris

​Claudia wants to grow her assets

​Open and operate her own business. She needs to grow her savings to use as startup capital.

​Different dreams demand different portfolios.SM

​Chris wants a source of income

​He needs to withdraw from his savings for living expenses in retirement.

Different dreams demand different portfolios. SM​

​Index descriptions

​Bloomberg Barclays U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and consists of U.S. Treasury and government related bonds, corporate securities and asset-backed securities.

Standard & Poor’s 500 Index is a market capitalization-weighted index based on the average weighted results of approximately 500 widely held common stocks.

Bloomberg® is a trademark of Bloomberg Finance L.P. (collectively with its affiliates, “Bloomberg”). Barclays® is a trademark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Neither Bloomberg nor Barclays approves or endorses this material, guarantees the accuracy or completeness of any information herein and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

The S&P 500 is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2018 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 is prohibited without written permission of S&P Dow Jones Indices LLC.

The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.

Claudia requires a growth portfolio​

​Chris requires a growth and

income portfolio

​That's why we believe each

requires a portfolio aligned

to their goals

​With targeted solutions to

help get them there

​We design investments to accomplish

varied and focused objectives, with

flexibility across size, style, geography

and asset class.

​The Capital Group Portfolio Oversight Committee developed the modell portfolios on May 9, 2011. Results and data for the model portfolios shown are based on the current underlying fund allocations rebalanced monthly.

For returns that reflect changes in the underlying fund allocations over their lifetimes, see American Funds Growth Model Portfolio and American Funds Conservative Growth and Income Model Portfolio.

​American Funds® Growth

Model Portfolio

​10-year return: 7.69%

​10-year standard deviation: 15.42%

​30-day yield: 1.11%

Class F-2 shares as of 12/31/17

​American Funds®

Conservative Growth and

Income Model Portfolio

​10-year return: 5.98%

​10-year standard deviation: 9.02%

​30-day yield: 3.06%

Class F-2 shares as of 12/31/17

​Important details

​For underlying funds and allocations, please view the Growth Model Porfolio or Conservative Growth and Income Model Portfolio.

​For underlying funds results and expenses, click here.

​Standard deviation is a measure of how returns over time have varied from the mean and is one of the most common measures of absolute volatility. A lower number signifies lower volatility.

​The yield for the current model allocation is a weighted average of the underlying funds annualized 30-day SEC yields a NAV. The SEC yield reflects the rate at which the underlying funds are earning income on their current portfolio of securities.

​Important details

​For underlying funds and allocations, please view the Growth Model Porfolio or Conservative Growth and Income Model Portfolio.

​For underlying funds results and expenses, click here.

​Standard deviation is a measure of how returns over time have varied from the mean and is one of the most common measures of absolute volatility. A lower number signifies lower volatility.

​The yield for the current model allocation is a weighted average of the underlying funds annualized 30-day SEC yields a NAV. The SEC yield reflects the rate at which the underlying funds are earning income on their current portfolio of securities.

​Explore our model portfolios

​A solution for every client

​Explore our solutions

Meet Claudia and

Chris

Claudia wants to grow her assets

Open and operate her own business. She needs to grow her savings to use as startup capital.

Different dreams demand different portfolios.SM

Chris wants a source of income

He needs to withdraw from his savings for living expenses in retirement

Different dreams demand different portfolios.SM

Claudia requires a growth portfolio

Chris requires a growth and income portfolio

That's why we believe each requires a portfolio aligned to their goals

With targeted solutions to help get them there

We design investments to accomplish varied and focused objectives, with flexibility across size, style, geography and asset class.

American Funds® Growth Model Portfolio

10-Year Return: 7.69%

​10-Year standard Deviation: 15.42%

​30-Day Yield: 1.11%

​Class F-2 shares as of 12/31/17

​      Important Details

American Funds® Conservative Growth and        Income Model Portfolio​

10-Year Return: 5.98%

​10-Year standard Deviation: 9.02%

​30-Day Yield: 3.06%

​Class F-2 shares as of 12/31/17

​     Important Details

​A solution for every client

Largest equity holdings as of 9/30/18

Largest equity holdings are based on portfolio total assets. For American Funds model portfolios, they reflect the averages of the underlying funds as of September 30, 2018. The underlying funds are managed, so holdings will change. The American Funds Growth Model Index Blend is 70% S&P 500 and 30% MSCI ACWI ex USA indexes, which is the index blend that the Portfolio Oversight Committee believes most closely approximates the investment universe of the model portfolio. The index does not specifically represent the benchmarks of the underlying funds in the American Funds model portfolio, which differ. For example, the model portfolio allocation includes 10% SMALLCAP World Fund that, unlike the index blends, can invest in small-cap stocks. The American Funds Conservative Growth and Income Model Index Blend is 40% S&P 500, 15% MSCI ACWI ex USA, 30% Bloomberg Barclays U.S. Aggregate and 15% Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped indexes, which is the index blend that the Portfolio Oversight Committee believes most closely approximates the investment universe of the model portfolio. The index does not specifically represent the benchmarks of the underlying funds in the American Funds model portfolio, which differ. For example, the model portfolio allocation includes 15% American High Income Trust and 15% U.S. Government Securities Fund that, unlike the Bloomberg Barclays U.S. Aggregate Index, include larger allocations to high-yield bonds and/or U.S. government and mortgage-backed securities. Investors cannot invest directly in an index. 

​Index descriptions

Bloomberg Barclays U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market and consists of U.S. Treasury and government related bonds, corporate securities and asset-backed securities.

Standard & Poor's 500 Index is a market capitalization-weighted index based on the average weighted results of approximately 500 widely held common stocks.

Bloomberg® is a trademark of Bloomberg Finance L.P. (collectively with its affiliates, “Bloomberg”). Barclays® is a trademark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Neither Bloomberg nor Barclays approves or endorses this material, guarantees the accuracy or completeness of any information herein and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

The S&P 500 is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2018 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 is prohibited without written permission of S&P Dow Jones Indices LLC.

The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.

Largest equity holdings as of 9/30/18

Largest equity holdings are based on portfolio total assets. For the American Funds model portfolios, they reflect the average of the underlying funds as of September 30, 2018: Growth Model (10% SMALLCAP World Fund, 15% EuroPacific Growth Fund, 20% The Growth Fund of America, 20% AMCAP Fund, 20% Fundamental Investors and 15% The Investment Company of America) and Conservative Growth and Income Model Portfolio (20% American Mutual Fund, 25% Capital Income Builder, 25% The Income Fund of America, 15% American High Income Trust, and 15% U.S. Government Securities Fund). The underlying funds are managed, so holdings will change.  

For underlying funds and allocations, please view the Growth Model Portfolio or Conservative Growth and Income Model Portfolio.

​For Underlying funds results and expenses, click here

Standard deviation is a measure of how returns over time have varied from the mean and is one of the most common measures of absolute volatilty. A lower number signifies lower volatily.

The yield for the current model allocation is a weighted average of the underlying funds' annualized 30-day SEC yields at NAV. The SEC yield reflects the rate at which the underlying funds are earning income on their current portfolio of securities. 

EXPLORE MODEL PORTFOLIOS

See how we fit into your portfolios.

Model portfolios

Complete, scalable portfolio solutions

Individual funds

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2018 Portfolio Playbook

Capital Ideas Editorial Team
January 2018
Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. View returns for the American Funds Growth Model Portfolio and American Funds Conservative Growth and Income Model Portfolio.

Investments are not FDIC-insured, nor are they deposits of or 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.

Cash & equivalents includes short-term securities, accrued income and other assets less liabilities.

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.

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. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks.

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.

Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.

Fund shares of U.S. Government Securities Fund are not guaranteed by the U.S. government.

For more information about the risks associated with each fund or underlying fund, go to its detailed fund information page or read the prospectus.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect expense reimbursements, without which results would have been lower. Please see americanfunds.com for more information. Expense ratios are as of fund prospectuses available at the time of publication. Class F-2 share results prior to the date of first sale are hypothetical based on Class A share results without a sales charge, adjusted for estimated annual expenses. Results for certain funds with an inception date after August 1, 2008, also include hypothetical returns because those funds’ Class F-2 shares sold after the funds’ date of first offering. Please see americanfunds.com for more information on specific expense adjustments and the actual dates of first sale.