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Fund Spy

Lifting the Curtain on Changes at American Funds Bond Fund of America

Recent changes to this fund's portfolio manager structure shows much tinkering going on.


 American Funds Bond Fund of America (ABNDX) has transformed itself in recent years. While we've been following these changes closely--disappointing results in 2008 caused the firm to strategically shift away from corporate bonds toward more government-backed offerings--the fund's recently released prospectus, as well as meet­ings with the team, has shed new light on just how they've been going about it.

First, some background: Longtime investors and observers may recall that for much of its history, BFA tended to lean more toward credit-sensitive and corporate fare than many of its peers. Until 2007, corporate and high-yield bonds often made up about two thirds of the portfolio, with mortgages and government bonds taking up the balance. That focus on corporate bonds was a natural outgrowth of the firm's equity research and its emphasis on bottom-up, fundamental company research. After all, corpo­rate bonds are just another rung on a company's capital structure.

Janet Yang, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.