American Funds American High-Income Trust® Class R-5E RITHX

With strong succession planning and a restrained appetite for risk, American Funds American High-Income Trust is a compelling long-term option.

The benefit of Capital Group continuously cultivating a bench of talent has been shown here of late. Only months after publicly naming Andy Moth as a fifth manager in December 2024, the strategy’s second-longest tenured manager, Tara Torrens, stepped away from the industry for personal reasons in July 2025, returning the strategy to four named managers.

Torrens’ departure is a loss, but it's one this multimanager offering can handle. With principal investment officer David Daigle anchoring the team and fellow 30-year industry veterans Tom Chow and Shannon Ward still running money, Moth will oversee a higher share of the overall portfolio than he would have otherwise. But he already proved that he can be effective over a four-year stint between late 2020 and late 2024 as an undisclosed manager on the fund, a typical practice at Capital.

Moth has a greater penchant for credit risk than Torrens, but the strategy’s stringent internal fund-level guidelines relative to the Bloomberg US High Yield 2% Issuer Capped Index should keep the risks in his sleeve and those of the other managers in check. These guidelines, first implemented in late 2020, include limiting exposure to credits rated BB and above as well as CCC and below.

The fund still has a relatively aggressive tilt. While its credit profile has moderated relative to its own history, its 13%-18% stake in CCC debt over the past three years through June 2025, though largely in line with its index, has been 4-7 percentage points more than the high-yield bond Morningstar Category distinct peer median.

The guidelines also don’t prevent missteps. Entering the year with a 1.9% combined weighting in the debt of NFE Financing and its US-based parent company, New Fortress Energy, has held the fund back in 2025. Delays, cost overruns, and uncertainty power contracts tied to Puerto Rico caused its bonds to lose more than half their value in the first half of the year. Daigle said in retrospect that the position size was too large given the risks the company faced.

Even so, the fund has stayed competitive in the short and long run. The 7.58% gain of its R6 share class for the year to date through September 2025 ranks near the peer group’s top third and Bloomberg US High Yield 2% Issuer Capped Index benchmark and the ICE Bank of America US High Yield Index category benchmark by 35 and 12 basis points, respectively. And over the past five years, the fund has been one of the category’s best performers, especially when results are adjusted for volatility.

This fund’s renewed focus since 2021 on the midquality portion of the high-yield bond universe has proved effective and merits an Above Average Process rating.

For much of the decade prior to April 2018, when David Daigle took over as principal investment officer of this strategy, its wide-ranging focus on income included a healthy dose of emerging markets sovereign bonds and a penchant for double-digit overweights to CCC rated credits. That made for poor results, which Daigle sought to improve. Working with Capital Group’s risk and quantitative solutions group and reflecting on the strategy’s struggles, including a lackluster 2019, he established by late 2020 more stringent internal fund-level guidelines relative to the Bloomberg US High Yield 2% Issuer Capped Index to keep volatility in check while allowing enough latitude within individual managers’ sleeves to pursue attractive opportunities. The guidelines limit exposure to credits rated BB and above as well as CCC and below, cap the amount of equity that can be acquired through restructurings, and ensure interest rate exposure (as measured by duration) doesn’t stray too far from the benchmark’s.

Fundholders benefit from the managers’ mix of investment styles. Daigle is most apt to assess bonds based on issuer fundamentals, while Andy Moth is more prone to incorporate top-down judgments and has a more aggressive style in buying lower-rated bonds. A former trader, Thomas Chow, regularly seizes on relative value differences, turning over his holdings often. Shannon Ward is a benchmark-aware investor who pays close attention to the ratings mix in her portfolio to gain an edge.

The portfolio’s characteristics since late 2020 provide a gauge of what investors can expect here. The fund now keeps at least 80% of its assets in junk bonds. Exposure to leveraged loans has been between 2% and 5%. It was at the upper end of that range in June 2024, for example, but that was still well below the 15%-40% bank-loan stake held by the top decile of high-yield bond peers. A 3%-5% weighting in the equities of high-yield issuers undergoing restructuring is typical for the fund, while cash hovers around 5%-8%.

Exposure to a single issuer can exceed the benchmark’s 2% cap, as a 2.7% stake in the debt of EchoStar (DISH Network) showed in mid-2025, but a fund-level position won’t go much beyond that. Individual managers have more flexibility within their sleeves for single-issuer exposure. That lets them invest in line with their highest-conviction ideas, provided other managers don’t like the same issuer.

The fund’s credit profile has moderated relative to its own history, but it can still take more risks than most high-yield bond rivals. Its 13%-18% stake in CCC debt over the trailing three years through June 2025 has been largely in line with its index but 4-7 percentage points more than the peer median.

Versus the index at the sector level, the June 2025 portfolio was nearly 9 percentage points lighter in consumer cyclical companies and 2.8 percentage points heavier in real estate investment trusts like Service Properties. The debt of this single CCC credit, which operates hotels under brands such as Marriott and service-oriented retail real estate, was the second biggest issuer in the fund.

American Funds’ multimanager system helps to handle this fund's more than USD 25 billion asset base, one of the high-yield category's biggest. With a veteran team, strong analytical resources, and fund ownership that stands out versus most peers’, the strategy earns an Above Average People rating.

The four named managers are a complementary mix of homegrown talent and external hires. David Daigle has worked on this strategy for all 30 of his years at Capital Group, first as an analyst for nine years, then as a diversified sleeve manager since 2003, and as principal investment officer since April 2018. Thomas Chow joined Capital and this strategy in early 2015 from Delaware Investments, while Shannon Ward joined from Oaktree Capital Management in 2017. Andy Moth joined Capital in September 2016 from HBK Capital Management. He worked on this fund as an analyst for four years before running a diversified sleeve beginning in late 2020. Chow and Ward have more than 30 years of industry experience, while Moth has worked in the industry since 2003.

The managers draw on five veteran traders as well as a stable and experienced 10-person high-yield analyst team. All the analysts make industry-specific bond picks as part of the fund’s Research Portfolio, which collectively constitutes a fifth diversified sleeve of the fund’s assets. Some analysts may also serve as undisclosed managers of relatively small, diversified slices, a regular practice at Capital to develop talent and help with succession.

The managers align their interests with investors’ through fund ownership. Daigle and Ward each have more than USD 1 million in the fund, while Moth invests at least USD 500,000 and Chow 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.

Performance has been outstanding since the late 2020 implementation of guidelines to recenter the fund on the midquality portion of the high-yield bond universe. From the start of 2021 through September 2025, the R6 shares’ 5.9% annualized return beat the fund’s primary prospectus Bloomberg US High Yield 2% Issuer Capped Index benchmark and the ICE Bank of America US High Yield Index category benchmark by 144 and 145 basis points, respectively, while placing in the top decile of nearly 170 distinct high-yield bond peers. More impressively, the R6 share class’ information ratio versus the category index (a risk-adjusted measure of excess return relative to excess standard deviation) ranked first out of all rivals.

The fund’s best calendar-year showing over that stretch versus the peer group was a top-decile 8.74% gain in 2021. Bond-picking within commodity-related issuers in the energy sector, having hurt the prior three years, powered the fund in 2021.

Underperformance in 2019 set the stage for implementing the fund’s internal guidelines. Its 12.24% return was solid in absolute terms but lagged more than two-thirds of rivals. The fund’s 23% average stake in bonds rated CCC, a double-digit overweighting to the category median, weighed on results. Whereas lower-rated bonds typically outperform in credit rallies, that year concerns about weakening global growth led to less demand for CCC bonds; BB and B rated bonds fared better.

American Funds American High-Inc R5E's Prospectus Adjusted Expense Ratio is 0.51% per year. It places it in the cheapest quintile of the Morningstar US Fund High Yield Bond Category, where the median fee is 0.75% per year. This cost positioning translates into a Medalist Rating Price Score of 1.58, 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.