American Funds Capital World Growth and Income Fund® Class R-4 RWIEX

While American Funds Capital World Growth and Income’s management team continues to change, the strategy maintains a sound investment approach and remains a solid global core option.

The strategy is under the stewardship of Principal Investment Officer Sung Lee, who is responsible for overseeing aggregate exposures, risk, and mandate alignment of underlying sleeves, and benefits from Capital Group’s multimanager structure. There are nine named managers, including Lee, who average 31 years of investment experience and seven years on the strategy. While the deep analyst bench and strong investment culture remain meaningful positives, the named manager lineup’s persistent and elevated turnover warrants caution. Since 2018, 10 managers have departed the strategy, and only three of the nine current managers have been here for more than 10 years. In addition to organizational changes and retirements, this partly reflected the firm’s ongoing efforts to find the optimal mix of managers for this strategy. For example, Capital Group has been adding some US-focused managers to improve US representation in the portfolio, such as Reed Lowenstein and Diana Wagner, who were both named in 2024. However, Lowenstein retired in 2025, while Wagner stepped down in February 2026. Michael Beckwith, who was named in 2025, continues to bring a US focus, and the undisclosed manager's sleeve serves as an incubator for future successors.

The strategy balances growth and income by combining a capital appreciation focus with an overall portfolio yield that matches the MSCI ACWI benchmark. The multimanager system, with nine independently run portfolio manager sleeves, plus an analyst-managed research sleeve and an undisclosed manager's sleeve, promotes diversification across region, sector, and investment styles in the portfolio. It allows experienced managers to run independent, high-conviction portfolios that best express their distinct investment approaches and styles, through bottom-up investments.

At over USD 140 billion as of Sept. 30, 2025, the strategy is by far the largest in the category and raises potential capacity concerns. While the US vehicle had a decent liquidity portfolio, asset size remains a key watchpoint.

Since Lee became PIO in 2020, the strategy has delivered competitive long-term results. It has lagged in narrow, momentum-driven rallies such as in 2024, reflecting limited exposure to US mega-cap growth leaders. Relative performance improved in 2025, supported by positive stock selection in consumer staples, industrials, and information technology.

Despite the ongoing lineup changes, the strategy remains in decent shape to outperform over the long haul, provided the team can continue managing capacity and stabilizing the lineup.

A balance between capital appreciation and income delivered through Capital Group’s proven multimanager structure supports an Above Average Process rating. The managers aim to balance the growth and income mandate by combining a capital appreciation focus with a benchmark-matching yield at the aggregate level. The dividend yield of each sleeve must be at least in line with its respective primary benchmark, and in aggregate, the fund’s yield aligns with the MSCI AWCI benchmark. The growth component reflects long-term capital appreciation, and in practice, the portfolio behaves like a core-oriented strategy with some downside resilience, as it invests primarily in established and cash-generative companies.

Under Capital Group’s multimanager approach, each of the nine named managers runs an independent sleeve of the portfolio, alongside an analyst-managed research sleeve and an undisclosed manager's sleeve. Beyond maintaining a yield that aligns with their respective benchmarks, managers have considerable latitude to apply their distinct investment styles. They may emphasize different characteristics, such as asset-light business models, strong competitive positioning, or management quality. They have the flexibility to use cash and bond tactically. Cash is typically 2%-8% of assets but has risen to 15% during periods of market stress, such as 2007, while bond exposure has generally been minimal. This combination of separately managed sleeves invested across the large-cap global equity universe blends growth-leaning and value-oriented perspectives, promotes diversification across regions, sectors, and styles, and supports the delivery of corelike results with some downside resilience.

Excessive trading is frowned upon. Annual portfolio turnover typically stays below 40%, and the strategy has held many key positions for five years or more.

The portfolio is designed to behave as a diversified global core strategy built from complementary sleeves with varying styles and geographic focuses. The multisleeve structure results in larger positions where multiple managers independently reach strong conviction, while differentiated ideas appear at smaller weights. The strategy holds a broadly diversified portfolio of roughly 340 stocks across regions, sectors, and market capitalizations, with a focus on financially sound large-cap companies.

The strategy has often leaned toward non-US companies, partly due to valuation considerations and the investment opportunities favored by several portfolio managers. The firm has been working to address the historical US underweight by adding US-focused managers and using customized benchmarks to strengthen US representation within the portfolio. While the US allocation has increased, it remains underweight relative to the MSCI ACWI benchmark. As of Dec. 31, 2025, the US vehicle held 54% in US equities versus 64% for the index. The US vehicle remains overweight in developed Europe, including the UK, at 24 % versus the benchmark’s 15%, and it has kept emerging-market exposure around 10%, in line with the benchmark.

Sector exposures generally resemble the benchmark, with differences kept within single-digit ranges. The portfolio’s top three sectors, namely information technology, industrials, and financials, together accounted for 55% of assets as of December 2025.

While the team remains highly capable with strong analyst support, the continued manager reshuffle keeps the People Pillar rating at Average. The strategy benefits from a seasoned multimanager setup under the Capital System with a dedicated PIO Sung Lee, who oversees aggregate exposures, risk, and mandate alignment across the team.

There are nine disclosed managers from the two subsidiaries, Capital World Investors and Capital Research Global Investors, down from 10 following Diana Wagner transitioning off the strategy on Feb. 1, 2026. The strategy has undergone notable turnover since the 2018 restructuring. In addition to organizational changes and retirements, this partly reflects the firm’s ongoing efforts to refine the manager mix for this strategy. More recently, the firm has focused on adding managers with a stronger US focus and a slightly more growth-oriented style to the strategy. Reed Lowenstein and Wagner were added in 2024, but neither remained long, with Lowenstein retiring in early 2025 and Wagner transitioning off in 2026. Michael Beckwith was disclosed in February 2025 to strengthen US exposure, while long-tenured manager Jeremy Burge also retired that month.

Despite the turnover, the team retains deep experience, with a median of 31 years in the industry and 25 years at Capital Group, supported by more than 100 seasoned analysts who contribute meaningfully, including through a research-portfolio sleeve. However, ongoing turnover of the manager lineup remains an important area to monitor.

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 decent long-term results. Since January 2020, when Sung Lee became the PIO, the US vehicle’s A share class has produced an annualized return of 11.8% through January 2026, ahead of the global large-stock blend category’s 10.1% but modestly trailing the MSCI ACWI benchmark’s 12.4%.

The strategy is often underweighting the US, which can introduce performance swings when US stocks lead global markets. In 2024, for instance, the strategy’s roughly 15 percentage point US underweight accounted for a significant portion of its 3.6% underperformance relative to the benchmark, despite strong US stock selection.

Still, the strategy’s preference for well-established companies and embedded income requirement, together with the diversification benefits of Capital Group’s multimanager structure, can provide some protection in market corrections. The fund held up better than the benchmark by 1.1% in 2022’s downturn, supported by positions such as Canadian Natural Resources and Philip Morris International. In 2025, the strategy greatly outperformed from positive security selection in consumer staples, industrials, and information technology, beating the benchmark by 2.4% and ranking in the 13th percentile of peers.

American Funds Capital World Gr&Inc R4's Prospectus Adjusted Expense Ratio is 0.76% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Global Large-Stock Blend Category, where the median fee is 0.88% per year. This cost positioning translates into a Medalist Rating Price Score of 0.68, 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.