Capital Group Core Equity ETF CGUS

Increased confidence in Capital Group Core ETF’s retooled team drives a People rating upgrade to Above Average from Average.

Following several changes, this strategy's management roster is on firmer footing. In early 2026, manager Keiko McKibben retired and then manager Blair Frank followed midyear. To support the transition, on Dec. 1, 2025, Capital Group disclosed Jessica Spaly, Martin Jacobs, and Brad Barrett as managers. As is common at the firm, each had already been managing assets for the strategy in an undisclosed capacity for roughly a year. Additionally, veteran investor Cheryl Frank joined the team at the start of 2026. Managers Charles Ellwein and Caroline Jones provided continuity, having been on the strategy for 11 and six years, respectively. Spaly and Jacobs manage a similar strategy at the firm, bolstering confidence. As a result, roughly 35% of assets transitioned to new managers. The team appears well-positioned for greater stability going forward.

The managers draw from the eligible universes of three of the firm's dividend-oriented and core large-cap strategies, providing a broad opportunity set. The mandate also allows up to 15% of assets to be invested outside the US, adding another source of flexibility.

Although the exchange-traded fund launched only in early 2022, it follows a strategy that has been employed in a variable insurance series since the mid-1980s. The strategy emphasizes higher-quality companies, which should help it hold up relatively well during market downturns. Indeed, that offering has captured only 93% of the S&P 500’s downside during the trailing 10 years through September 2026. And since the ETF’s February 2022 launch, that downside protection helped it lose less than the S&P 500 in both 2022’s market pullbacks and during early 2025’s market correction due to tariff uncertainty. Through September 2026, the ETF’s 15% annualized gain handily outpaced the large-blend Morningstar Category peer norm.

This strategy’s 0.33% net expense ratio places it among the category’s cheapest actively managed funds, which gives it a leg up on the competition and makes it a solid option.

This strategy employs a flexible growth-and-income approach that relies on blending the investment team’s diverse styles. The process remains a key strength and merits an Above Average rating.

The strategy stands out for its flexibility. It seeks to mix dividend-paying companies with growth-oriented holdings, resulting in a diversified portfolio across sectors and industries. The managers draw from the combined eligible stock universes of three of the firm’s other large-cap strategies, giving them a broad opportunity set. They can further differentiate the portfolio by investing up to 15% of assets in foreign companies that are typically competitively advantaged global businesses.

The approach reflects the strengths of Capital Group’s multimanager system. By dividing assets into independently managed sleeves, managers can focus on their highest-conviction ideas while the blend of sleeves helps dampen volatility. The flexibility to hold cash when attractive investment opportunities are limited provides an additional source of downside protection.

Like most Capital Group strategies, this one has a long-term investment horizon. Annual portfolio turnover in a related insurance-series vehicle has ranged from 19% to 45% over the past decade, reflecting the managers’ willingness to remain patient with their highest-conviction holdings.

This fund mirrors the firm’s variable insurance series, American Funds Insurance Series Growth-Income, which dates back to the mid-1980s. While company-level research has the biggest impact on the portfolio’s positioning, the managers uphold the strategy’s income objective, roughly a yield in line with the S&P 500, when building positions. As of September 2026, top 20 holdings Amazon.com and Vertex Pharmaceuticals didn’t pay a dividend and required managers who owned them to add higher-yielding stocks to their portfolio sleeves. While some of these are tech firms like Broadcom, a good portion comes from dividend havens, such as tobacco, where the strategy has had a 1- to 2-percentage-point industry overweighting recently. British American Tobacco and Philip Morris International are both portfolio holdings.

Sector weightings are mostly in line with the index, but there are some areas of differentiation. For example, the strategy has long had a 5- to 9-percentage-point underweighting in technology relative to the index, as many of those companies don’t pay a dividend, but that gap has closed recently and was down to roughly 1.2 percentage points as of September 2026. The fund’s largest deviation was its 3.8-percentage-point underweighting in financials.

The managers have typically stashed about 10% of assets overseas in large multinationals and had top 20 stakes in semiconductor giant TSMC and British American Tobacco.

A recent overhaul of the management team leaves this strategy on firmer footing and supports an upgrade of its People rating to Above Average from Average.

Following several changes, this strengthened team enters its next chapter with greater stability. In early 2026, manager Keiko McKibben retired and then manager Blair Frank followed midyear. To ease the transition, on Dec. 1, 2025, the firm disclosed Jessica Spaly, Martin Jacobs, and Brad Barrett as managers, though each had already been managing assets for the strategy in an undisclosed capacity for roughly a year—as is common at Capital Group. Veteran investor Cheryl Frank also joined the management team at the start of 2026. Continuity remains strong due to Charles Ellwein and Caroline Jones, who have been on the strategy for 11 and six years, respectively. Additionally, both Spaly and Jacobs’ experience managing a similar strategy instills further confidence. With roughly 35% of assets transitioned to new managers and the changes now largely complete, the team appears well-positioned for greater stability going forward.

The strategy benefits from a diverse mix of investment styles, with each manager contributing a distinct perspective to the growth-and-income mandate. Jacobs favors growth-oriented stocks, while Ellwein brings a value bias. Jones and Spaly typically have core approaches, avoiding strong tilts toward value or growth. Together, these complementary viewpoints help produce a diversified, balanced portfolio. Roughly 50 analysts provide support, and several of them manage positions within the portfolio’s analyst sleeve.

Capital Group stands out from the pack as it enhances capabilities around strong core competencies. It earns a High Parent rating.

Since 1931, Capital Group, parent of American Funds, has thoughtfully built out capabilities to become one of the world’s largest asset managers, managing more than USD 3 trillion dollars. Building on the success of its long-term-oriented, multiple-manager system for global equities, the firm has developed robust fixed-income and multi-asset units, each managing more than USD 500 billion. In January 2026, as part of its periodic review of its now five distinct research organizations, Capital Group implemented changes to its equity investment subsidiaries. This exercise resulted in most equity strategies having at least one portfolio manager change, but according to the firm, it better balances each of Capital Group’s three equity groups in terms of investment breadth and helps the firm better align leadership opportunities across the groups. These kinds of shifts have occurred before, with the last coming in 2018.

Capital Group has also turned its attention to some modern opportunities. To address public/private market convergence trends, it launched in April 2025 two semiliquid funds with private market giant KKR. In keeping with its signature portfolio management approach, it splits those funds into multiple sleeves, which are managed independently by distinct managers at each firm. Capital Group plans to deepen this relationship with target-date and model portfolios, as well as public/private equity funds. On the other end of the spectrum, although the firm is firmly dedicated to active management, it has also acknowledged investor preference for passive investing and has thus partnered with indexing stalwarts Vanguard, BlackRock, and Schwab on active/passive models. Capital Group’s proven investment prowess, strong reputation among investors, and scale mean it can be selective with its partnerships.

In addressing another recent trend, since early 2022, the firm has launched more than 25 active exchange-traded funds globally, most of which are distinct, but several are similar to some of its legacy American Funds mutual funds. Unlike some of its peers, though, it has not filed for SEC exemptive relief to offer ETFs as a share class.

That’s a lot of change for such a storied and sizable firm, but Capital Group has a long history of serving investors well.

While this ETF was only launched in February 2022, its returns through September 2026 handily outpaced the large-blend category peer norm and landed in line with its S&P 500 benchmark. The strategy’s variable-insurance series vehicle, which the ETF mimics, has a much longer record dating to the mid-1980s. Since manager Charles Ellwein joined that product in mid-2015 through September 2026, its 13.2% annualized gain bested the large-blend norm’s 11.6% but lagged the S&P 500’s 14.1%. It has had lower volatility than relevant peers and indexes, though, so its risk-adjusted results were competitive.

This strategy’s focus on more established and higher-quality fare has given it some resilience in down markets. For example, in 2022’s market pullback, the strategy’s 16.3% loss was less than the S&P’s 18.1% loss and landed in the top 40.0% of the category. In the early 2025 pullback, the strategy lost less than the S&P 500 and its category norm, thanks in part to a lighter technology stake and decent industrials picks like RTX and GE Aerospace.

The fund’s income orientation can be a headwind as in 2019 and 2021, but overall, the strategy’s flexible growth-and-income approach means it isn’t always. As growth rebounded in 2023 and 2024, the strategy posted competitive results landing in the top third of the category both years. In 2025 and the first three quarters of 2026, healthcare picks such as UnitedHealth Group and technology underweightings in Micron Technology and Advanced Micro Devices weighed on results.

Capital Group Core Equity ETF's Prospectus Adjusted Expense Ratio is 0.33% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Large Blend Category, where the median fee is 0.66% per year. This cost positioning translates into a Medalist Rating Price Score of 1.35, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.