American Funds The Bond Fund of America® Class 529-A CFAAX

American Funds Bond Fund of America has been a model of consistency in recent years, except for some stumbles around interest rates worth taking in stride.

The strategy’s poor showing thus far in 2026 is reminiscent of 2023. The portfolio’s greater sensitivity to rising interest rates (as measured by duration) and its yield-curve positioning weighed on results that year. This year, interest rate sensitivity has again hurt. In the first quarter, the management team moved the portfolio from a modestly short duration position versus the Bloomberg US Aggregate Bond Index to between 0.2 and 0.36 years longer than the index. That posture was a problem in the third quarter, when interest rates for the three- to 10-year part of the Treasury curve increased between 85 and 90 basis points. Rates have fallen since, but the strategy’s year-to-date showing through early November 2026 ranked in the bottom quintile of the intermediate-core bond Morningstar Category.

The strategy’s record since Pramod Atluri became principal investment officer at the start of 2020 remains outstanding, however, thanks in large part to a measured approach to risk-taking. That includes interest rate positioning. Its duration versus the benchmark has rarely exceeded half a year, and its duration range of roughly 5.7 to 6.4 years has hovered around the category median over Atluri’s tenure. Although the strategy has struggled to anticipate and take advantage of yield curve changes, those efforts have not caused results to differ materially from those of the benchmark. In fact, the strategy’s rolling one-year tracking error versus the index, a measure of differentiation, has remained at or below the category median from 2020 through October 2026.

The strategy’s five named managers and analyst-led research portfolio excel in allocating assets to attractively valued parts of the market. Amid tightening valuations within agency mortgage-backed securities, the team cut exposure in 2026’s first three quarters while adding to the strategy’s corporate bond weighting as yield spreads in that corner of the market widened. That’s contributed to the portfolio’s yield advantage of nearly 50 basis points versus the index, as of September 2026.

Bond-picking is another strength, with big positions often being built at opportune moments, sometimes years prior. For example, the fund’s typical 2.4% high-yield bond stake as of September 2026 included a 30-basis-point stake in the debt of specialty chemicals manufacturer Celanese. Following a debt-financed acquisition and business headwinds, Celanese first lost its investment-grade credit rating in November 2024, around the time the fund’s weighting in the company increased more than fivefold, when the analyst covering Celanese then judged the credit to be oversold.

Shifts like moving away from agency MBS and toward corporate bonds and picks like Celanese have been key to this fund’s past success and should bode well for its future, occasional setbacks notwithstanding.

As American Funds’ flagship bond offering, this strategy has benefited greatly from the firm’s post-2008 overhaul of its fixed-income operations, including fostering greater coordination among managers, enhancing its tools and resources, and adding external talent. All these factors, combined with strong, risk-aware execution, earn the strategy a High Process rating.

The strategy balances incentivizing its managers to stick to a straightforward core bond approach while granting them flexibility to draw on their respective areas of expertise and broader firm resources, which are better than most. With each manager running a separate sleeve of the overall portfolio, they can overweight sectors within the Bloomberg US Aggregate Bond Index or pursue attractive out-of-benchmark opportunities among high-yield bonds or Treasury Inflation-Protected Securities. Unlike years past, however, when specialist managers were more prone to a niche focus, all five managers and collectively the analyst-led research portfolio now gauge their results against the Aggregate Index.

Guardrails for junk bond exposure and interest rate sensitivity help keep risk in check. The fund’s stake in below-investment-grade bonds has rarely exceeded 4% under the current team, and in early 2024 the fund’s cap for junk-rated bond debt officially fell to 5% from 10% previously. Its duration has also stayed within 0.6 years of the benchmark’s, though it can deviate by up to 1.0 year.

Launched amid the early 1970s stock bear market, this fund originally employed a corporate-credit-heavy, cash-bond approach until poor results in the 2007-09 credit crisis caused Capital Group to refashion the strategy and incorporate more tools of modern fixed-income investing, such as using derivatives to adjust the portfolio’s interest rate sensitivity, or duration, and its exposure to changing credit spreads. Whereas a high single-digit below-investment-grade stake used to be the norm here, a 2% to 4% allocation is now typical, and the team will sometimes hedge out a portion of that risk through index-level credit default swaps.

The team often buys BB rated debt it believes could benefit from a near-term ratings upgrade, or that has recently fallen to BB from BBB and appears to represent a bargain because the debt has been oversold. The fund’s 2.4% high-yield bond stake, as of September 2026, included a 30-basis-point position in the debt of specialty chemicals manufacturer Celanese as an example of the latter. Following a debt-financed acquisition and business headwinds, Celanese first lost its investment-grade credit rating in November 2024, around the time the fund built most of its current position. The Capital Group analyst covering Celanese believes its business remains stable today, a judgment that’s in line with the option-adjusted yield spreads at which Celanese bonds trade versus similarly rated credits during the fall of 2026.

Like almost all actively managed intermediate-core bond funds, this one underweights Treasuries versus the benchmark by double digits, allowing it to allocate to parts of the market with higher yields. While the fund’s 29.1% corporate-bond weighting as of September 2026 remained within its typical range of 20%-30% of assets, it leaned into corporate credit exposure in 2026’s first three quarters. Relative to the benchmark, its weighting shifted to a 5.2-percentage-point overweighting (its largest in four years) from a 1.7-percentage-point underweighting. The fund has maintained a roughly 7% stake in asset-backed securities in 2026, primarily with AA and AAA ratings, versus the benchmark’s 0.1% ABS weighting over the same period. Its agency MBS exposure, on the other hand, dropped 5.3 percentage points as the fund trimmed them amid tightening yield spreads between the end of 2025 and September 2026, leaving its 20% stake underweight the index by 3.1 percentage points.

American Funds’ multimanager system helps to handle this fund's roughly USD 100 billion asset base, the intermediate core bond category's biggest active offering. The fund's High People rating reflects its strengths as well as the investment team’s experience, ability, and fund ownership.

American Funds’ parent Capital Group splits this fund’s assets between its five named managers and the analyst-led research portfolio. Generalist Pramod Atluri, a former corporate bond analyst and core manager at Fidelity, joined Capital Group in February 2016 and began overseeing money here about six months later. He took over as the fund’s principal investment officer at the start of 2020. Fellow generalists include David Hoag, Chit Purani, and John Queen, the team’s newest addition. He has spent 24 of his 36 years in the industry at Capital but only began managing a sleeve here in an undisclosed capacity in 2024 before the firm publicly named him as a manager in March 2025. Purani is also a recent addition, starting in March 2024, while Hoag is the longest-tenured manager, having run a portion of the portfolio since 2009. MBS expert Fergus MacDonald has even more experience here than Hoag, though. He has run a sleeve of the portfolio since 2015 but before that supported the fund as an analyst for 11 years.

The five managers, whose industry experience ranges from 22 to 38 years, can invest their individual sleeves of the overall portfolio in line with their backgrounds and convictions, provided they consider firmwide portfolio strategy group guidance and adhere to the fund’s risk guardrails. The roughly 30-person team responsible for its research portfolio includes experts in Treasuries, agency and nonagency MBS, emerging markets debt, and investment-grade corporate bonds.

All five managers align their incentives with shareholders through investing their own money in the strategy. Atluri and Hoag both have more than USD 1 million in the fund, while MacDonald and Queen each invest between USD 500,001 and 1 million, and Purani at least USD 100,000.

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.

Since the start of 2020, when Pramod Atluri took over as principal investment officer, the mutual fund version of this strategy has an excellent record versus its benchmark and peer group through October 2026. Its R6 shares’ 1.4% annualized gain beat the Bloomberg US Aggregate Bond Index by 68 basis points while placing in the top quintile of distinct category rivals. Its volatility-adjusted results were even better. The R6 shares’ information ratio versus the category index (a risk-adjusted measure of excess return relative to excess standard deviation) ranked second highest out of 120 peers.

While the strategy is willing to lag in any given quarter or year to set itself up for longer-term success, annual outperformance has been the norm under Atluri’s tenure as principal investment officer. Beginning in 2020, the fund has beaten its benchmark in five of six calendar years since, and its median peer in four of them. Its best showing came in 2020. Entering that year with a conservatively positioned portfolio helped during the March coronavirus-driven selloff. So, too did deft moves before and after it. Having increased the fund’s Treasury stake in February out of concern about the coronavirus’ potential impact, the managers responded to the Federal Reserve’s two March interest rate cuts by selectively adding MBS and corporate bonds, including high-yield issues, which helped during the market’s bounceback rally. The fund’s 11.11% return in 2020 beat the index by 3.6 percentage points and was one of the peer group’s best.

The strategy has struggled thus far in 2026. It is on pace to trail both its index and median peer for the first time since 2023. That year, the portfolio’s greater sensitivity to rising interest rates (as measured by duration) and its yield-curve positioning weighed on results. Interest rate sensitivity again hurt in 2026. In the first quarter, the team moved the portfolio from a modestly short duration position versus the benchmark to between 0.2 and 0.36 years longer than the index. That became especially painful in the third quarter, when interest rates increased between 85 and 90 basis points across the three- to 10-year part of the Treasury curve. Rates have fallen since, but the strategy’s year-to-date showing remains poor. Through Nov. 10, 2026, the R6 shares’ 1.22% loss trailed the benchmark by 42 basis points and placed it in the peer group’s bottom quintile.

American Funds Bond Fund of Amer 529-A's Prospectus Adjusted Expense Ratio is 0.61% per year. It places it in the second-most-expensive quintile of the Morningstar US Fund Intermediate Core Bond Category, where the median fee is 0.46% per year. This cost positioning translates into a Medalist Rating Price Score of -0.86, 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.