Capital Group Core Plus Income ETF

CGCP

Market cap $7.08B

The Capital Group Core Plus Income ETF remains a 'Buy' due to robust performance and consistent outperformance versus passive aggregate bond peers. CGCP's portfolio emphasizes investment-grade assets, with 36% MBS, 33% corporates, and 21% Treasuries, minimizing excessive credit risk. The ETF has delivered lower drawdowns and stable alpha, outperforming AGG and BND by 62 bps over nearly two years.

Markets are broadening beyond the dominance of U.S. technology stocks, creating opportunities across international equities, value stocks and fixed income. The Capital Group ETF platform has captured this shift since entering the market four years ago this week.

Capital Group Core Plus Income ETF delivers a 5% yield from a diversified, actively managed bond portfolio with a low-risk profile. CGCP has outperformed the total bond market since its inception in February 2022. Compared to competitors, CGCP has one of the cheapest expense ratios but lags JCPB and TOTL in return and risk metrics.

With under four years as a U.S. ETF provider, Capital Group is about to cross a major milestone. The firm's active ETF lineup had $98 billion in assets as of November 5.

Capital Group Core Plus Income ETF offers a high 5% yield and monthly distributions, making it attractive for income-focused investors seeking portfolio diversification and lower equity correlation. The fund's price has been suppressed by high interest rates, but future rate cuts could serve as a catalyst for price appreciation and total return. CGCP's portfolio is mostly investment-grade debt, with limited default risk and no leverage, supporting its resilience in uncertain markets.

Capital Group Core Plus Income ETF offers a 5% yield from a diversified, low-risk debt securities portfolio with a 0.34% expense ratio. The CGCP ETF has outperformed the total bond market since inception but experienced an 11.9% price decline, losing 23% in inflation-adjusted value. Compared to competitors, CGCP has one of the lowest expense ratios and average performance and risk metrics, with JCPB and TOTL marginally better.

An actively managed fund hitting its three year track record used to be a major milestone. A Morningstar rating would follow.

Advisors and investors have long turned to active management for fixed income exposure. They are increasingly favoring ETFs to access the markets.

Investors are shifting from covered call equity strategies to traditional fixed-income assets, making the Capital Group Core Plus Income ETF a compelling option. The fund diversifies across government debt, agency bonds, corporate bonds, mortgage-backed securities, and emerging market debt, with a significant U.S. focus. Compared to AGG and BND, CGCP offers higher yields and flexibility through opportunistic investments in high-yield bonds and non-U.S. dollar markets.

Actively managed ETFs continued to gain traction in July with $24 billion of net inflows. This represented 19% of the industry's net inflows, which remains impressive given the 7% share of the assets.