American Funds Capital Income Builder® Class R-2E RCEEX

American Funds Capital Income Builder features a disciplined approach to dividend-paying stocks across the globe, with a dose of well-crafted fixed-income exposure to offset equity volatility.

Despite a series of recent portfolio manager changes, this strategy’s nine equity managers and four fixed-income managers represent an experienced and capable group. In the second half of 2025, equity managers Caroline Randall and Philip Winston retired, while Steven Watson was removed but still manages other funds for the firm. Meanwhile, equity manager Saurav Jain and fixed-income manager Brian Wong were named to the fund at the start of 2025, while equity manager Dimitrije Mitrinovic and fixed-income manager Andrea Montero were added at the start of 2026. Some of the additions were a result of succession planning and the recent reorganization of the equity team.

Both Jain and Mitrinovic have logged at least five years investing in dividend-paying stocks at other well-regarded American Funds offerings. Montero and Wong have not previously been named portfolio managers but previously worked on the fund as undisclosed managers and thus benefited from working with the strategy’s long-tenured bond managers, David Hoag and Fergus MacDonald. The latter duo, along with five of the equity managers, have each run pieces of the strategy for more than a decade.

The strategy effectively balances income generation and capital appreciation. It typically invests 70% to 80% of its assets in global equities and the remainder in bonds. That split varies based on the team's views of valuations and macroeconomic conditions, though sizable shifts are rare. The large cohort of managers could water down returns, but the correlation of excess returns between the managers' portfolios has been modest. The bond portfolio aims to both boost income and serve as ballast and has typically stanched losses during selloffs.

This strategy’s US, UCITS, Canada, and Japan funds' yields before fees typically rank in the upper echelon of their respective Morningstar Category peers. The managers thoughtfully consider where to source this income and actively manage yield expectations. For example, they cut the portfolio’s payout in 2021 by roughly 20% owing to low bond yields and declining stock dividends at the time. The equity portfolio will tilt toward higher-yielding areas. These include non-US firms, which typically make up close to half of the stock portfolio, and sectors such as consumer staples, utilities, and telecoms, which are often overweight relative to the MSCI All Country World Index.

The strategy's results can diverge from the broad market when high-yielding equities go in and out of favor. Indeed, the US fund's A shares lagged the benchmark for its now-retired category, global allocation, each calendar year from 2015 through 2020. But relative returns have since rebounded, and the fund has handily surpassed its typical peer and a blended benchmark (70% MSCI ACWI High Dividend Yield Index and 30% Bloomberg US Aggregate Bond Index) that better reflects how it invests over most trailing periods. The fund also beat its typical peer on a risk-adjusted basis (as measured by the Sharpe ratio and alpha) in its new category as of May 1, 2026—global moderately aggressive allocation—in most periods up to 20 years.

This risk-conscious strategy seeks income and appreciation while providing downside protection, earning an Above Average Process Pillar rating.

The equity managers and a group of analysts run the lion’s share of this strategy's assets (typically 70% to 80%, sometimes as low as 60%) and tend to use prudent, appealing approaches to manage their individual sleeves. The firm's fixed-income effort has become more disciplined in recent years. Principal investment officer Winnie Kwan leads the team's asset-allocation process, which is based on fundamentals, particularly valuation.

The fixed-income portfolio aims to get a modest yield boost through investment-grade corporate and securitized debt. But that portion of the strategy serves primarily as ballast, so the equity side tends to drive results. The strategy often straddles the line between seeking higher absolute dividends and owning firms with steadily growing payouts. The equity portfolio typically has larger stakes in interest-rate-sensitive areas such as utilities and telecom, but the managers also seek dividend growth in sectors such as technology and healthcare.

A multimanager system allows the managers to each ply their own approaches to security selection, but the overall portfolio aims to meet a before-fee yield hurdle of 2.4%. To reduce the temptation to stretch for yield by taking on more risk, the team has the flexibility to reduce the yield target, and it did so in March 2021 by roughly 20% in response to low-bond yields and declining stock dividends. (The target has since remained at that level.)

The strategy has a neutral equity weight of 70%, but that allocation has run the permissible gamut of 60% to 80% of assets. It’s been on the higher end lately. Low bond yields caused the managers to boost the equity weighting above 75% in early 2021, and it has remained there for much of the ensuing five years. Equity exposure was trimmed in early 2026 from roughly 79% to 76% based on valuations and macroeconomic considerations.

Non-US equities often constitute close to half of the equity stake. Against the MSCI ACWI Index, the equity managers are typically overweight in high-yielding sectors like utilities and REITs. Longtime equity holdings include dividend-payers such as Philip Morris International and British American Tobacco. That makes the strategy's equity portfolio more interest-rate-sensitive than most global moderately aggressive allocation peers.

In the bond portfolio, credit risk is mild, with less than 10% of that sleeve invested in bonds rated below-investment-grade. This portfolio is largely split among Treasuries, corporates, and mortgage-backed securities and sticks mainly to US issuers. The strategy invested less than 1% of its total assets in non-US bonds in March 2026.

The strategy’s large manager roster has seen a number of recent changes. But the bulk of the portfolio remains in capable, experienced hands and merits an Above Average People Pillar rating.

Turnover has been substantial among the strategy’s manager ranks of late. In the second half of 2025, equity managers Caroline Randall and Philip Winston retired, while Steven Watson was removed but still manages other funds for the firm. Meanwhile, equity manager Saurav Jain and fixed-income manager Brian Wong were named to the fund at the start of 2025, while equity manager Dimitrije Mitrinovic and fixed-income manager Andrea Montero were added at the start of 2026. Some of the additions were a result of succession planning and the recent reorganization of the equity team.

Both Jain and Mitrinovic have logged at least five years investing in dividend-paying stocks at other well-regarded American Funds offerings. Montero and Wong have not previously been named portfolio managers but previously worked on the fund as undisclosed managers and thus benefited from working with the strategy’s long-tenured bond managers, David Hoag and Fergus MacDonald. The latter duo, along with five of the equity managers, have each run pieces of the strategy for more than a decade. That cohort includes Winnie Kwan, a comanager since 2007 and the strategy’s lead principal investment officer (responsible for coordinating the portfolio and occasionally making tactical-allocation shifts) since 2020.

Six undisclosed portfolio managers ran 11% of the strategy at the end of 2025, while a research portfolio steered by the firm’s equity analysts comprised another 17%.

Undisclosed corporate-bond specialists run portfolios in which the fixed-income managers invest at their discretion. While Capital's equity teams have long-held reputations as compelling active stock selectors, the fixed-income team only showed clear signs of strength in managing risk-aware mandates following a retooling of their resources in the late 2010s.

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.

This strategy has thrived lately after a less-than-stellar period. Its yield mandate largely precludes it from owning most growth giants that soared for most of the 2009-20 period, such as Amazon.com. The strategy has been able to own some growthy dividend-payers, such as Microsoft, but firms that have long paid substantial dividends, such as British American Tobacco, badly lagged the market during that period.

The portfolio's fortunes have turned because of strong security selection and because value stocks have outperformed their growth counterparts for much of the five years through April 2026. The A shares of the US fund outperformed 80% of its peers on both a total-return and risk-adjusted basis during that period. The Z shares of the UCITS fund and the F shares of the Canada-domiciled fund each surpassed similar proportions of their respective category peer groups. The US fund also beat the Morningstar Global Allocation Index and a 70% MSCI ACWI High Dividend Yield Index/30% Aggregate Index blend that better reflects how the managers invest. The fund moved to the new global moderately aggressive allocation category on May 1, 2025.

The US fund, which has a far longer history (both the UCITS and Canada-domiciled funds were launched in 2018, while the Japan fund just launched in August 2023), beat its typical peer and the two benchmarks on most risk-adjusted measures for most trailing periods up to 20 years.

American Funds Capital Income Bldr R2E's Prospectus Adjusted Expense Ratio is 1.06% per year. It places it in the second-most-expensive quintile of the Morningstar US Fund Global Moderately Aggressive Allocation Category, where the median fee is 0.93% per year. This cost positioning translates into a Medalist Rating Price Score of -0.7, 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.