American High-Income Municipal Bond Fund® Class F-3 HIMFX

American High-Income Municipal Bond stands out in the high-yield muni Morningstar Category for the quality and depth of its investment team and its disciplined, risk-aware approach, both of which have translated into strong long-term results.

Capital Group’s multimanager structure remains a clear advantage, giving this experienced management team flexibility to express its best ideas. Each named manager runs a separate portfolio sleeve, and analysts oversee another dedicated sleeve, which gives each member can overweight bonds within the Bloomberg Municipal Bond Index constituents as well as attractive off-benchmark opportunities. Chad Rach, who has managed this strategy since 2011 and has served as principal investment officer since 2018, oversees the overall portfolio exposures and risks. Rach works alongside high-yield muni specialist Jerome Solomon and leverages his deep background in credit research across sectors such as utilities, healthcare, and corporate-backed munis.

The sleeve-based structure helps minimize disruption from manager changes. Lee Chu joined the management roster in October 2025, replacing Courtney Wolf, who now focuses on other municipal mandates, including Capital Group Municipal Income ETF. Chu joined the firm in 2008 and most recently worked as a fixed-income investment analyst and municipal research director covering state and local governments and tribal gaming. This type of transition is fairly common at Capital Group, and Chu’s long tenure and prior research leadership should help keep the strategy’s research-driven approach intact.

The firm continues to invest in risk-management and analytical tools, sharpening the team's ability to identify value across the high-yield muni market. The managers avoid leverage and generally steer clear of the market’s most distressed issuers, which helps contain volatility. They often hold roughly 10% of assets in cash for liquidity, keep duration (a measure of interest-rate sensitivity) shorter than the category peer median, and maintain less exposure to illiquid nonrated bonds than many rivals, though the team will buy lower-quality credits if valuations warrant it.

That disciplined and relatively conservative approach compared to more aggressive rivals has translated to strong and consistent results over the long-term. Over the 10-year trailing period, the F3 share class’ 3.7% annualized gain beat more than 90% of distinct peers through April 2026, and its information ratio (a measure of excess return over excess standard deviation versus the benchmark) ranked at the top of the group.

A strong, risk-aware approach further boosts Capital Group’s time-tested fundamental research and outstanding resources; it earns a High Process rating.

The three managers operate within clear guardrails, but each has the flexibility to lean into their areas of expertise and collaborate with analysts and traders around relative valuations when building the portfolio. Within Capital Group’s multimanager system, each manager and analyst (for the analyst-led sleeve) has discretion over buy, sell, and sizing decisions when constructing their sleeve with their highest-conviction ideas relative to the Bloomberg Municipal Bond Index. Chad Rach, the principal investment officer, oversees the strategy and ensures the overall portfolio exposures remain balanced, while the firm’s risk and quantitative group, led by Chris Brune, adds another layer of oversight.

The firm’s broad fixed-income capabilities keep this team well-equipped. The managers can move quickly when opportunities emerge, thanks to data, research, and trading resources, as well as a 10% cash bucket for liquidity. At the same time, several long-term themes anchor the strategy; the managers usually take less interest-rate risk and hold fewer nonrated bonds than many high-yield muni category peers. They also avoid leverage, which can amplify volatility. Even so, they conduct deep credit work and will buy below-investment-grade and nonrated stakes when valuations justify it. The portfolio also leans toward revenue bonds with durable cash streams. That value-conscious, bottom-up approach has helped the strategy weather larger drawdowns in weak markets while still keeping pace when muni markets rebound.

The managers typically focus their purchases on revenue-backed bonds with strong income streams. Since mid-2020, the team has identified opportunities in the special tax (22% of assets) and corporate-backed muni sectors (14%), which increased by 10 and 6 percentage points, respectively, by December 2025. The portfolio's healthcare allocation had been a long-time notable overweighting relative to its benchmark, particularly in the aftermath of the early-2020 market turmoil when that sector reached 26% of assets (as of June 2020). While the team continues to see value there, they have trimmed the exposure to 17% of assets by 2025’s end (compared with the index’s 20%), as more hospital and senior living centers face budget challenges and the value in those positions has diminished.

At times, the managers take less credit risk than the high-yield muni category peer median. The strategy held 15% of assets in bonds rated BB or below and another 40% in nonrated bonds. Together, those exposures sat just below the category median. Within the below-investment-grade bucket, distressed Puerto Rico debt accounted for 5.5% of assets.

The fund typically takes less interest-rate risk, as measured by duration, than the category median while staying close to the index. As of December 2025, the fund’s 6.9-year duration was 0.2 years shorter and 1.3 years shorter than the index and the category peer median, respectively.

This experienced team stands out for its ability to source attractive municipal opportunities, and Capital Group’s multimanager structure reinforces those strengths; it earns a High People rating.

The team brings deep municipal experience to the strategy. Chad Rach has been in the muni industry for three decades, served as the fund’s principal investment officer since 2018, and has managed this strategy since 2011. He anchors the portfolio and works alongside high-yield muni specialist Jerome Solomon, who has comanaged the strategy since October 2017. Solomon also brings more than 30 years of industry experience and has spent much of that time as a manager and muni credit analyst across sectors such as utilities, healthcare, and corporate-backed munis. Ten muni credit analysts and six dedicated traders deepen the bench and add another layer of insight.

Capital Group’s multimanager structure supports thoughtful succession planning. Each named manager runs a separate sleeve, while analysts oversee another dedicated sleeve, giving future portfolio managers a chance to demonstrate investment judgment before joining the management roster. That setup helped ease manager Lee Chu’s October 2025 transition onto this fund, when she replaced Courtney Wolf, who now focuses on other municipal mandates, including Capital Group Municipal Income ETF. Chu joined the firm in 2008 and most recently worked as a fixed-income investment analyst and research director covering munis, with a focus on state and local governments and tribal gaming. Her long tenure, research leadership, and familiarity with Capital Group’s investment process should preserve the strategy’s research-driven approach.

Manager ownership, which reflects alignment with investors, is strong. Rach and Solomon each invest over USD 1,000,000 in this fund, while Chu has between USD 100,001 and 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 strategy has delivered compelling absolute and volatility-adjusted returns over the long term.

Since October 2011, the fund’s principal investment officer Chad Rach’s first full month, the fund’s F3 share class’ 4.8% annualized return through March 2026 outpaced more than 80% of distinct high-yield muni peers and topped the Bloomberg Municipal Index’s 2.9% return. The strategy’s information ratio (a measure of excess return over excess standard deviation versus the benchmark) also topped all peers during the same period.

The strategy’s relatively cautious style often provides investors with better downside protection than most rivals when muni markets get rough. For example, in March 2020's volatility, its 7.8% drop was 155 basis points less than the peer median. Security selection in healthcare and transportation supported strong results through the end of that year. While the fund endured a steep 11.6% loss during 2022's bond market volatility, it held up better than three-fourths of peers during that calendar year, aided by a pivot to higher-quality bonds and less interest rate risk.

When muni markets are strong, this strategy may lag peers who take more credit risk, but not by much. For example, when investors reached for yield in 2021, performance was strong but not stellar. The fund’s 5.9% gain that year outpaced the category peer median’s 5.8% return slightly.

In 2025, security selection in the special tax, transportation, and utilities sectors contributed to outperformance relative to the index; its 4.7% gain that year outpaced the index’s 4.3% and topped almost all category peers.

American High-Income Municipal Bond F3's Prospectus Adjusted Expense Ratio is 0.32% per year. It places it in the cheapest quintile of the Morningstar US Fund High Yield Muni Category, where the median fee is 0.64% per year. This cost positioning translates into a Medalist Rating Price Score of 2.33, 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.