American Funds Inflation Linked Bond Fund Class R-1 RILAX

American Funds Inflation Linked Bond and its counterpart, the Capital Group Inflation Linked collective investment trust, benefit from experienced, specialized managers and deep firmwide resources, though the strategy’s flexible implementation can lead to more variable outcomes than peers and the benchmark.

Principal Investment Officer Ritchie Tuazon and comanager Tim Ng anchor the strategy with focused expertise in interest rate and inflation markets. Tuazon joined Capital Group in 2011, became a sleeve manager in 2013, and assumed leadership of the strategy in 2017. Ng, who has nearly 20 years of industry experience, joined the fund in 2021, succeeding David Hoag, who remains at the firm. The managers draw on Capital Group’s extensive fixed-income platform, including US rates specialists, sector managers, economists, traders, and research analysts. Input from the firm’s portfolio strategy group and risk and quantitative solutions teams further informs portfolio construction.

The approach seeks to balance its real return mandate with selective off-benchmark positioning versus the Bloomberg US Treasury Inflation Protected Securities Index. Duration and yield-curve decisions drive roughly 60% of excess returns, while sector allocation and security selection account for the remainder. Treasury Inflation-Protected Securities normally constitute 85% to 90% of assets, complemented by measured allocations to corporate, securitized, and emerging-market debt. The managers actively use derivatives to adjust exposures and generally keep duration within one year of the benchmark, while retaining the flexibility to deviate more when conviction is high.

Long-term performance since Tuazon’s tenure began in November 2013 remains competitive, though recent results underscore the variability inherent in the strategy’s flexible style. Through March 2026, the R6 shares outpaced both its Morningstar Category median and benchmark. More recent five-year results lagged most peers, reflecting headwinds from interest rate positioning, particularly in 2023. Performance improved in 2024 and 2025, supported by more effective duration and yield-curve positioning.

The strategy allows managers to express high-conviction views, which differentiates it from peers but can also lead to periods of unexpected outcomes, supporting an Average Process rating.

Duration and yield-curve positioning drive roughly 60% of excess returns, while sector allocation and security selection across TIPS, nominal Treasuries, and other spread sectors account for the remainder. The firm’s interest rate team and Portfolio Strategy group develop macroeconomic themes that guide duration, curve, and inflation positioning. TIPS typically represent 85% to 90% of assets, with credit exposure, including corporate bonds, securitized assets, and emerging-market debt, generally ranging from 5% to 15%. The managers avoid below-investment-grade securities and actively use derivatives, such as Treasury futures and credit default swap indexes, to implement macro views. While credit default swap positions can introduce basis risk, they also allow the team to capitalize on relative value opportunities between index and cash markets.

The managers generally target interest rate duration and duration-times-spread exposures within one year of the benchmark, but they have periodically deviated meaningfully. For example, portfolio duration was 3.4 years shorter than the benchmark's in June 2020 and 2.3 years longer in March 2021. Since late 2023, non-US currency exposure has no longer served as a material return lever. The team relies on the Aladdin risk management system to monitor and decompose risks, supporting the strategy’s inflation-protection objective.

Active duration and yield-curve adjustments relative to the Bloomberg US TIPS Index reflect the team’s probability-driven conviction level in its macro views.

TIPS make up the core of the portfolio, averaging about 88% of assets since inception, though this share typically runs below the category norm. The managers have demonstrated flexibility at times, such as in 2020 and 2021, when they increased allocations to corporate bonds and securitized assets and reduced TIPS exposure to roughly 80%. Since early 2021, the managers have maintained a net short credit posture through credit default swap protection that more than offset long investment-grade corporate holdings. This positioning weighed on relative results in 2023 as credit spreads tightened, while earlier reductions in corporate, securitized, and emerging-market exposure reflected disciplined responses to tight valuations.

In calendar years 2024 and 2025, the fund benefited most from duration. Most recently, the managers entered 2025 with a duration of about 0.8 years longer than that of the index. They saw an opportunity to add to duration as real yields rose after the 2024 election. This paid off as long-term real yields fell throughout 2025, and the TIPS curve steepened. Since then, the team moved duration closer to peer and benchmark levels in response to heightened uncertainty tied to trade policy and geopolitical developments.

The comanagers bring deep experience and specialized expertise in interest rate and inflation markets, and strong support from Capital Group’s broader fixed-income platform underpins an Above Average People rating.

Ritchie Tuazon, the fund’s principal investment officer, joined Capital Group in 2011 after more than a decade as an interest rate and inflation trader at Goldman Sachs. He has managed the strategy since 2013, when he became a sleeve manager, and assumed lead responsibility in 2017. Ng adds nearly 20 years of investment experience and a similar background in rates and inflation markets. Capital Group named Ng as a comanager in February 2021, and Ng took on an expanded role following David Hoag’s departure in early 2023 to focus on the firm’s core and core plus strategies.

Capital Group’s multimanager structure assigns each comanager responsibility for a distinct portfolio sleeve, with assets trending toward an even split; Tuazon currently oversees about 52% of assets. Both managers sit on the firm’s interest rate team and draw on a deep bench of analysts, traders, economists, and portfolio strategists. Ongoing collaboration with the fixed-income portfolio strategy group and risk and quantitative solutions teams further strengthens decision-making.

Alignment with investors is solid but could be better; Tuazon owns between USD 500,001 and USD 1 million, while Ng has between USD 100,001 and USD 500,000 invested in the fund.

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 fund has delivered solid long-term results since November 2013, the first full month since lead manager Ritchie Tuazon joined the strategy, placing it among the better performers in the inflation-protected bond category despite more recent headwinds. Over Tuazon’s tenure, the R6 shares’ 2.59% annualized return through March 2026, surpassed the category median's 2.32% gain and modestly outpaced the Bloomberg US TIPS index’s 2.46%. Risk-adjusted performance also stands out, with the strategy’s Sharpe ratio ranked in the top quintile of peers.

This long-term success reflects effective macro positioning and selective off-benchmark exposures that enhanced returns from the fund’s core inflation holdings. Shorter-term results, however, have proved more challenging. Over the trailing five years ended March 2026, the strategy delivered a 0.91% annualized return, lagging most category rivals and landing in the bottom quintile, as several macro calls moved against the portfolio.

The previous two calendar years were more encouraging. Performance rebounded in 2024, when the fund gained 2.2% and exceeded the typical peer by roughly 25 basis points. The fund’s 7.2% return in 2025 was better than the typical rival by about 30 basis points. Better duration and yield-curve positioning drove the recovery, demonstrating the strategy’s ability to translate improved macro conditions into competitive results.

American Funds Inflation Linked Bd R1's Prospectus Adjusted Expense Ratio is 1.4% per year. It places it in the most expensive quintile of the Morningstar US Fund Inflation-Protected Bond Category, where the median fee is 0.58% per year. This cost positioning translates into a Medalist Rating Price Score of -2.15, 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.