Capital Group US Multi-Sector Income ETF

CGMS

Market cap $3.32B

What differentiates CGMS is a flexible multi-structure management designed by Capital Group. It allows the fund (theoretically) to maintain a flexible approach in the face of credit risk. Today the credit spread shows a low risk premium, and the Fed has started cutting rates which makes CGMS a subject of discussion.

Some income ETFs offer investors diversified exposure to high-quality bonds across sub-asset classes. Of these, BINC, CARY, and CGMS seem like particularly strong choices, due to their above-average yields and returns, below-average risk and volatility. All are strong, broadly similar choices, with BINC having the most diversified portfolio, CGMS the highest returns, CARY the lowest volatility.

CGMS invests in several bond sub-asset classes, focusing on corporate bonds and MBS. It has an above-average 5.9% yield, has outperformed most of its peers since inception, and with lower volatility to boot. It is a solid, diversified, vanilla bond fund, and a buy.

Intermediate-duration bonds offer a good balance of yield and risk in the current interest rate environment, which is characterized by uncertainty and volatility. The Capital Group U.S. Multi-Sector Income ETF has delivered superior returns compared to similar active bond ETFs over the past two years, demonstrating strong management. The current market conditions, with fluctuating and unpredictable interest rates, create an ideal environment for active bond fund managers who can adjust portfolios dynamically.

CGMS, CARY, BINC, and JPIE are diversified, actively managed bond ETFs with above-average yields and returns and below-average risk and volatility. CGMS offers the highest returns and volatility, while CARY provides the best risk-adjusted returns, making it my top choice. BINC has balanced sector exposures with solid returns, and JPIE boasts the highest-quality portfolio but the lowest returns.

Capital Group U.S. Multi-Sector Income ETF is an actively managed bond ETF. It holds a diversified portfolio of bonds, focusing on investment-grade corporate bonds. CGMS has an above-average 5.8% yield and has had above-average total returns. Credit risk is moderate, duration and overall volatility below-average.

Capital Group U.S. Multi-Sector Income ETF offers a balance of high income and capital appreciation for investors. The CGMS ETF is well-diversified, with a mix of U.S. dollar-denominated income-generating assets, including high yield and investment grade bonds. CGMS' active management approach and focus on relative value credit investing may lead to better risk-adjusted returns compared to passive ETFs.

The Capital Group U.S. Multi-Sector Income ETF is a new active fixed-income ETF launched in 2022. The fund seeks current income, investing primarily in U.S. domiciled issuers. Over 70% of its current collateral is invested in corporate bonds, although the fund has a broad mandate. CGMS achieved outstanding results in the past year, posting a total return of over 8%, with a low annualized volatility of only 5.6%.