Capital Group Municipal Income ETF CGMU

A seasoned leadership team and a research-driven, disciplined approach help Capital Group Municipal Income ETF stand out among muni national intermediate Morningstar Category peers.

While this active ETF’s track record is still relatively short, the comanagers bring stability, deep experience, and a track record of strong decision-making in their mutual fund offerings, which has been critical to the strategy’s success since its October 2022 launch. In line with Capital Group’s broader mutual fund lineup, the firm adopted its signature multimanager approach here in January 2026. This shift from a single portfolio structure to sleeves run by three managers improves accountability and execution while giving each manager room to showcase their individual strengths.

Courtney Wolf serves as principal investment officer and oversees the overall portfolio exposures and risks. She draws on more than a decade of firm experience as an analyst covering airport and tobacco bonds. She is joined by comanagers Mark Marinella, a muni veteran and former global CIO at State Street Global Advisors, who focuses on investment-grade debt, and Jerome Solomon, who specializes in high-yield munis. Together, they form a well-rounded portfolio team that has successfully navigated market cycles and gives this strategy an edge over rivals.

The managers tap into a seasoned team of 10 muni analysts and six dedicated traders who deepen the research foundation, while the firm’s risk and quantitative group collaborates closely with the managers to help manage portfolio risk.

This research-driven approach gives the team flexibility to add credit risk when it sees value. The managers favor revenue bonds backed by consistent cash flows, avoid using leverage, and typically keep the portfolio’s duration (a measure of interest rate sensitivity) near the category median. Still, this core-plus approach to munis allows up to 35% in below-investment-grade debt and exposure to bonds subject to the alternative minimum tax. As of December 2025, the strategy held 15% in below-investment-grade bonds—well below its cap but meaningfully above the typical peer’s 7%—reflecting their value-conscious portfolio positioning.

That means the exchange-traded fund may do relatively well in strong muni markets, but returns may stumble when credit-sensitive bonds sell off. So far, this approach has paid off. Since its October 2022 inception, the ETF’s 6.3% annualized return through January 2026 ranked in the top decile in the category. Strong judgment, deep resources, and improved portfolio construction should keep this strategy competitive across market cycles.

The team is still relatively new to managing this active ETF, but its diligent, research-driven, and risk-aware approach is time-tested; it earns an Above Average Process rating.

Capital Group’s multimanager system gives each of the three managers discretion over their split sleeves, while principal investment officer Courtney Wolf ensures the overall portfolio’s exposures remain balanced. Comanagers Mark Marinella and Jerome Solomon contribute complementary investment-grade and high-yield expertise, respectively, and the firm’s risk and quantitative group, led by Chris Brune, provides ongoing partnership to strengthen portfolio oversight.

Robust firmwide resources further enhance the process. The team benefits from efficient data, deep research, and tight trading coordination, which enables nimble portfolio adjustments. A few long-standing preferences add stability: the managers favor revenue bonds with strong cash flows and avoid using leverage, which can heighten volatility. Still, the team will tactically add below-investment-grade exposure when valuations are compelling. By mandate, it can allocate up to 35% to bonds rated BB or below (including nonrated debt)—one of the higher limits in the muni national intermediate category—and may also invest in AMT-eligible securities. But the team’s disciplined, value-conscious process and bottom-up credit work should help the portfolio remain resilient during market stress.

The managers keep the portfolio’s duration near the category median but are willing to take more credit risk when opportunities to buy lower-rated and nonrated bonds appear compelling. The December 2025 portfolio’s 5.3-year duration was slightly shorter than the typical peer’s 5.7 years, while its 15% allocation to bonds rated BB or below (including nonrated debt) stood roughly 8 percentage points above the median. This positioning reflects its custom benchmark, which consists of 85%/15% Bloomberg 1-15 Year Blend (1-17 Year) Municipal Bond Index/Bloomberg 1-15 Year Blend (1-17 Year) High Yield Municipal Bond Index.

Sector exposures reflect where the managers find value. Key overweightings versus the index include corporate-backed (16% of assets as of December 2025), healthcare (11%), and housing (13%) revenue bonds. Since the ETF’s inception, the managers have selectively added healthcare bonds—primarily hospitals and senior-living facilities—as they found attractive relative value. That stake has ranged between 7% and 12% of assets since launch.

Housing remains another meaningful area of emphasis. The team relies on its strong analyst bench to identify attractive opportunities in planned amortization class bonds. While these bonds provide higher yield, they introduce more risk, especially when prepayments rise in falling-rate markets or stall in rising-rate markets. Still, the team’s research-heavy approach helps it effectively manage those dynamics. The ETF’s 13% allocation to these bonds as of December 2025 was roughly in line with its average exposure since its inception.

The liquidity profile of this ETF is strong compared with other muni national intermediate ETFs. At 7.3 basis points, the average bid-ask spread as a percentage of the ETF's share price over the past 12 months through January 2026 was tighter than most peers. Its roughly USD 21 million average daily volume of shares traded ranked in the top decile out of 44 ETF rivals and was nearly 22 times greater than that of its peer median.

Deep experience and strong abilities, combined with Capital Group’s multimanager system, let this team focus on what it does best; it earns a High People rating.

A seasoned manager trio brings a mix of specialized expertise in the municipal market. Principal investment officer Courtney Wolf anchors the effort with two decades of industry experience and extensive muni market knowledge shaped by years as an analyst covering sectors such as airports and tobacco settlements. She works alongside comanagers Mark Marinella and Jerome Solomon. Marinella, a 39-year muni veteran and former global CIO at State Street Global Advisors, focuses on investment-grade rated munis and yield curve opportunities. Solomon, with 34 years of experience, brings high-yield muni expertise. Together, these managers form a well-rounded leadership team capable of identifying attractive relative values across the muni market.

Capital Group’s system further enhances the managers’ work. The multimanager structure divides the ETF’s assets among the three managers and lets each run a sleeve aligned with their background while they draw heavily on the firm’s extensive fixed-income resources. A 10-member muni credit analyst team and six dedicated traders strengthen the effort and add another layer of insight.

Manager ownership, which reflects alignment with investors, is strong. Wolf invests over USD 1,000,000 in this ETF, while Marinella and Solomon invest between USD 100,001 and USD 500,000.

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.

The managers have delivered solid performance over the ETF’s short track record.

Since the ETF’s inception in October 2022, its 6.3% annualized return through January 2026 outpaced more than 90% of muni national intermediate peers and beat the blend index’s (85%/15% Bloomberg 1-15 Year Blend (1-17 Year) Municipal Bond Index/Bloomberg 1-15 Year Blend (1-17 Year) High Yield Municipal Bond Index) 5.3% gain. The strategy’s information ratio (a measure of excess return over excess standard deviation versus the benchmark) also topped almost all peers during the same period.

But the ETF hasn’t faced a stiff test as it has gathered assets since its inception. This is critical because the core-plus muni approach aims to balance the steadiness of intermediate-term investment-grade muni bonds with the higher yield of below-investment-grade munis and munis subject to the alternative minimum tax. While it isn’t the most aggressive in the category, the January 2026 15% stake in low-quality bonds (including nonrated bonds) is more than the average rival.

That moderate high-yield stake has been a key contributor to strong relative performance since the ETF’s inception. In late 2023 and throughout 2024, when investors reached for yield and the muni market gained strength, lower-quality bonds boosted returns, as did each of the ETF’s sector selections. The portfolio’s overweighting in corporate-backed, housing, and healthcare bonds was particularly additive over that year. Investments in the housing sector focused on single-family housing were impactful, while escrowed, special tax, and education bonds were also positive.

More recently, security selection within transportation and corporate-backed revenue bonds continues to benefit the ETF; its 5.6% trailing one-year return through January 2026 ranked in the top quintile of the category.

Capital Group Municipal Income ETF's Prospectus Adjusted Expense Ratio is 0.27% per year. It places it in the cheapest quintile of the Morningstar US Fund Muni National Interm Category, where the median fee is 0.5% per year. This cost positioning translates into a Medalist Rating Price Score of 1.92, 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.