American Funds American Balanced Fund® Class R-3 RLBCX

Despite an unusual spate of manager turnover, this strategy is steered by an able group employing a disciplined approach.

Manager changes have become the norm here in recent years. As part of a broader reorganization of the equity team at Capital Group (this strategy’s advisor), equity portfolio managers Mark Casey and Irfan Furniturewala left the strategy on Jan. 1, 2026—the latter had been a named manager for less than three years. (The two continue to manage other strategies at Capital.) In 2024, equity manager Jeff Lager (the fund’s principal investment officer at the time) retired, and another, Anne-Marie Peterson, left to focus on other funds. Three other managers have departed since late 2020.

Yet, despite this personnel turnover, the 11-person crew managing this strategy remains highly qualified, even if it has, on average, spent less time on board than some previous cohorts. Balanced manager Hilda Applbaum and equity manager Alan Berro have served here for 20 years, another (Alan Wilson) has managed an equity sleeve for a decade, and current principal investment officer Paul Benjamin spent years as the coordinator of the analyst-run research portfolio before being named a manager in 2014. The latest addition to the strategy has highly relevant experience as well. Equity manager Anirudh Samsi joined on Jan. 1, 2026, and is well-versed in the dividend-focused approach to stocks that is employed here; he’s served as an equity manager on American Funds Income Fund of America since 2015. The fixed-income effort is also appealing, as that team’s process became more disciplined over the years and the firm brought in proven personnel to bolster the group.

The equity managers are backed by more than 50 analysts with plenty of experience pursuing a growth-and-income mandate such as this one; the managers aim to at least match the yield of the S&P 500. The fixed-income team aims to offset equity volatility while adding value through security selection. Asset-allocation moves, directed by Benjamin after discussions with the rest of the team, have been modest but generally additive.

The results have been strong over the short and long term: The US fund’s A shares have outpaced the average peer, category benchmark, and a 60/40 blend of the S&P 500 and the Bloomberg US Aggregate Bond Index over all trailing periods up to 15 years through February 2026 on both total and risk-adjusted returns (the latter based on the Sharpe ratio).

An appealing, consistent approach earns an Above Average Process rating.

The equity managers focus on blue-chip, dividend-paying stocks such as the top five holdings, Microsoft and Philip Morris International. Such stocks predominate—the strategy invested more in wide-moat stocks (those Morningstar’s equity analysts believe have substantial competitive advantages) at the end of 2025 than its average peer and the category benchmark. That profile stems in part from a mandate to generate a yield in line with or above the S&P 500's. That said, 10% of assets may be invested in non-dividend-payers. That leaves room for some growth-oriented fare such as Alphabet and Taiwan Semiconductor Manufacturing, both top 10 holdings at the end of 2025. The strategy's equity stake may range between 50% and 75% of assets and has averaged about 61% over the past 10 years through 2025. During that period, the equity weighting ranged from 54.5% to 65.5%. Tactical adjustments from the top down are typically small, but the weighting can also shift because of activity within the managers’ individual sleeves.

The fixed-income portfolio has long been a source of stability. The managers look to fixed income primarily to offset equity volatility, with income secondary, and the strategy avoids buying high-yield bonds; if a security is downgraded to junk status, the managers are expected to sell it within one year. They avoid big duration bets as well: Since mid-2011, they've often kept duration within roughly 0.5 years of the Aggregate Index, though the gap has at times widened.

Where the strategy falls within its 50%-75% equity range depends in part on the bottom-up decisions of the seven managers who invest either exclusively or primarily in stock. When valuations warrant, the principal investment officer can use flows to adjust the equity weight. In early 2020, for example, concerns about lofty valuations dropped the equity weight to 60% from 65% just before stocks’ sharp downturn began. But shifts of that size don’t happen often; there were none in 2021 or 2022. In 2023, the strategy gradually trimmed stock exposure as equities rallied, and in 2024, that weighting stayed stable as stocks continued to climb. It has since drifted up to about 65% as the equity managers have found more ideas in a rising, but top-heavy stock market.

Even when the equity stake is near the upper end of its range, a tilt toward mega-cap dividend-payers helps keep risk in check, as has a typically above-average stake in firms with wide Morningstar Economic Moat Ratings; nine of the fund’s 10 largest holdings at the end of 2025 earned such a rating.

While the strategy doesn’t make big duration bets versus its fixed-income benchmark, its duration has often stayed above the category norm. However, in December 2021, the strategy had a 5.4-year duration, more than a year short of the category average; that aided returns when interest rates shot upward in 2022. Duration then stayed shorter before reversing on rate expectations. At the end of 2025, it was 5.7 years, while the average peer’s was 5.0 and the benchmark’s was roughly 6.0.

Manager turnover has lately been the norm for this strategy. But it still has abundant and experienced resources, meriting an Above Average People rating.

As part of a broader reorganization of the equity team at Capital Group (this strategy’s advisor), equity portfolio managers Mark Casey and Irfan Furniturewala left the strategy on Jan. 1, 2026—the latter had been a named manager for less than three years. (The two continue to manage other strategies at Capital.) Equity manager Anirudh Samsi joined on that date, though, and he’s well-versed in the dividend-focused approach to stocks that is employed here; he’s served as an equity manager on American Funds Income Fund of America since 2015.

These were just the most recent changes. Principal investment officer Jeff Lager retired in 2024, while Anne-Marie Peterson left that year to focus on other funds. Three other managers have departed since late 2020.

However, the 10 remaining managers, in addition to Samsi, are also highly qualified. Balanced manager Hilda Applbaum and equity manager Alan Berro have served here for 20 years, another (Alan Wilson) has managed an equity sleeve for a decade, and current principal investment officer Paul Benjamin spent years as the coordinator of the analyst-run research portfolio before being named a manager in 2014.

The fixed-income effort is also appealing, as that team’s process became more disciplined over the years and the firm brought in proven personnel to bolster the group. One example: Fidelity veteran Pramod Atluri, a named manager on this strategy since 2018.

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.

This strategy has been firing on all cylinders.

Over the trailing three-, five-, 10-, and 15-year periods through February 2026, the US fund’s A shares surpassed most of its moderate-allocation category peers as well as the category benchmark, the Morningstar US Moderate Target Allocation Index, on total returns as well as Sharpe ratio (a measure of risk-adjusted performance). The fund also surpassed its internal benchmark (60% S&P 500/40% Aggregate Index) over those periods. The collective investment trust, launched in 2019, is virtually identical and is off to a strong start versus category peers and benchmarks. The Japan-domiciled portfolio, which is also a near-clone, just opened in late 2023.

Security selection has been the primary driver of outperformance versus peers and the benchmark. A heavy stake in mega-cap stocks in recent years has provided a strong tailwind in most periods. But even as market leadership shifted from growth stocks to value over the course of 2023-25, the strategy outperformed in all three calendar years. Management makes asset-allocation moves, typically modest in scope, that have often proved timely. The conservative fixed-income portfolio, which eschews high-yield debt, has typically provided ballast in declines. And although credit risk provided a big boost in 2022’s atypical downturn, the strategy held up better than peers and the benchmark through adept stock and bond selection.

American Funds American Balanced R3's Prospectus Adjusted Expense Ratio is 0.89% per year. It places it in the middle quintile of the Morningstar US Fund Moderate Allocation Category, where the median fee is 0.9% per year. This cost positioning translates into a Medalist Rating Price Score of 0.06, 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.