These Fund Managers Win by Playing Defence

Capital Group’s balanced fund for Canadian investors is Morningstar’s 2023 Exemplary Stewardship award winner.

Michael Dobson 12 May, 2023 | 4:28AM
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Michael Dobson: If you’re searching for a 60/40 portfolio that can play defence well from an award-winning organization, take a look at the Capital Group Global Balanced Canada fund. Each manager brings decades of experience and sources ideas from over 250 analysts worldwide. The cheapest share classes are rated Silver with the strategy showing an impressive ability to deliver through various and often tricky market environments.

A hallmark of Capital Group strategies is the multi-manager approach. Six managers choose securities independently of one another and in their own styles which results in resilient performance – when one manager’s style goes out of favour, another one will come in favour, which smooths returns. If someone leaves, Capital Group has a deep bench of proven portfolio managers to choose from.

Independent managers making their own decisions could result in some clashes, especially in a balanced fund where one manager could buy stocks while another sells, but the team seems coordinated on the allocation front.

Take for example the portfolio’s move into cash at the end of last year’s first quarter. Cash went from 3% in December 2021 to 12% in March 2022, a coordinated effort to divest in the face of market instability.

Defence is the name of the game for Capital Group and the net result is a fund with performance that ranks highly in its category not by posting gaudy returns, but by being steady.

At 6.3%, the F4 share class annualized returns rank in the top decile, that is the top 10 percent, of all funds in its category. What’s more impressive is how they did it. Global Balanced Canada recorded an up-capture ratio of more than 100% and a down-side capture ratio of 86% meaning it kept pace in the good times and outperformed in the bad times.

Global Balanced Canada is an excellent fund from Capital Group. The 2023 Morningstar Exemplary Stewardship award winner brings its vast investing experience and multi-manager style to deliver Canadians a robust 60/40 global portfolio. The team plays defense, not offense, and through that performed admirably and should continue to do so.

For Morningstar, I’m Michael Dobson.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Capital Group Global Balanced Canada F16.02 CAD-0.23Rating

About Author

Michael Dobson  Michael Dobson is an Associate Manager Research Analyst at Morningstar Canada

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