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Stock-Picking, Low Fees Boost This World Allocation Fund

Silver-rated American Funds Capital Income Builder is still strong despite the recent slump in dividend paying stocks.


Madeline Hume: The recent slump in dividend paying stocks hasn't changed our view on American Funds Capital Income Builder. This fund leverages robust building blocks to construct its income-focused portfolio. Unlike a lot of income-focused peers, this fund doesn't rely heavily on credit. Instead, it leans on the classic American Fund strengths of skilled stock-picking and low fees.

The fund's 12 managers run independent sleeves that are overseen by principal investment officer Jim Lovelace. Together with Dave Lee and Steve Watson, Lovelace targets a 70/30 equity/fixed-income split over the long haul. They recently shifted some of the fund's assets from equities to bonds because they expect an increase in stock market volatility. The bond portfolio tends to be focused on high-quality bonds which should provide that cushion if the market does get bumpier.

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