American Funds Tax-Aware Conservative Growth and Income Portfolio Class F-2 TXIFX

American Funds Tax-Aware Growth and Income series’ strong management team and thoughtful, research-based approach help it stand out among peers. It remains a great choice for tax-conscious investors. The series’ three portfolios are available as model portfolios and separate accounts, with the Tax-Aware Conservative Growth and Income portfolio also offered as a mutual fund.

This series is guided by the portfolio solutions committee, a capable crew of seven portfolio managers with expertise in multi-asset, equity, and fixed-income investing. Multi-asset manager Samir Mathur has chaired the committee since its formation in 2020, and the management team holds an average of 31 years of industry experience, many with long tenures at Capital Group. A 17-person analyst team from the capital solutions group supports the committee. The team started with just three analysts after the 2020 revamp, and the firm continues to thoughtfully invest in its growth.

The series focuses on aftertax capital appreciation and current income. In line with the series’ objective, the fixed-income exposure is built with municipal-bond funds to produce tax-exempt income. The team is mindful to choose naturally lower-yielding equity funds to ease investors’ potential tax burden from dividends. It employs a distinct objectives-based approach to this series, allocating to the roles equity and fixed income play rather than levels of risk.

The team has evolved the underlying fund lineup over the past few years in a bid for more tax efficiency. It added 12 Capital Group exchange-traded funds from 2023 to 2025, replacing American Funds strategies; all three portfolios in this series now entirely invest in ETFs. ETFs typically hold a tax advantage over mutual funds because they can provide in-kind redemptions and don’t need to pay out capital gains, so the addition of the ETFs here should help boost the series’ tax efficiency. Investors in taxable accounts may have owed taxes when the team reduced or removed American Funds strategies with embedded capital gains, but the team thoughtfully spread the transition out across three years to reduce the potential impact in any single year.

This thorough, research-based approach culminates in thoughtfully built tax-aware portfolios. The series earns an Above Average Process Pillar rating.

This series comes in three flavors: Tax-Aware Growth and Income (80%/20% equity/fixed income), Tax-Aware Moderate Growth and Income (65/35), and Tax-Aware Conservative Growth and Income (50/50). These portfolios are built for investors seeking capital appreciation and current income with a focus on aftertax returns. The series uses municipal-bond funds for its fixed-income holdings rather than taxable-bond funds to help ease the tax burden on investors. Equity allocations are adjusted based on the aggressiveness of the portfolio. For example, the Growth and Income portfolio sports more exposure to growth stocks than the other two, while the Conservative Growth and Income portfolio has higher exposure to established dividend-paying companies.

A unique, objectives-based approach informs asset-allocation decisions. Unlike many peers who allocate to a specific level of risk, the managers here allocate to the different roles equity and fixed income play in a portfolio, such as “growth” (growth stocks) and “tax-exempt income” (municipal bonds), to build this series. The group’s optimization model guides asset allocation and fund selection based on these portfolio objectives and the firm’s capital market assumptions. The team then carries out its own quantitative and qualitative analysis to determine the final strategic allocations and manager selection.

Management is mostly hands-off but revisits the allocations at least annually and will adjust occasionally. The series has evolved over the past few years, with the addition of 12 Capital Group ETFs: four in September 2023, three in July 2024, and five in August 2025. The ETFs replaced existing American Funds strategies in the lineup, so all three portfolios now invest entirely in ETFs. For example, funds featuring in all three portfolios now include Capital Group Global Equity ETF, Capital Group Dividend Growers ETF, Capital Group Core Equity ETF, Capital Group Municipal Income ETF, and Capital Group Municipal High-Income ETF. ETFs are typically more tax-advantaged than mutual funds, so this move should bolster the series’ tax efficiency. While no Capital Group ETFs clone American Funds strategies, there weren’t any significant shifts in sub-asset-class allocations.

The team relies on the flexibility of the actively managed underlying funds to drive sub-asset-class allocations. For example, most of the series’ non-US equity exposure comes through global stock funds rather than dedicated non-US stock funds, such as Capital Group Global Equity ETF and Global Growth Equity ETF, which have leeway to invest in opportunities around the globe. Allowing the underlying managers to use their expertise in bottom-up analysis plays to the firm’s strengths in that area.

This series’ topnotch management team, deep analyst bench, and strong lineup of underlying funds underpin its High People Pillar rating.

Capital Group’s multi-asset resources have quickly strengthened and grown since the team’s 2020 revamp. At that time, the portfolio solutions committee, which oversees this series, began focusing its efforts on the firm’s fund-of-funds strategies. Samir Mathur, a multi-asset portfolio manager, chairs the committee. Six other portfolio managers, each with at least 26 years of industry experience, join him. The comanagers bring unique asset-class expertise, with two specializing in multi-asset, two in equities, and two in fixed income. This cross-asset collaboration between the seven managers allows for different perspectives to surface and leads to robust oversight of the portfolios.

The capital solutions group provides research and allocation support to the committee. The analyst team has more than quintupled in size since 2020, to 17 analysts from three. They support the day-to-day monitoring of allocations, ongoing research, and coverage of underlying funds. Analyst and Research Director Glenn Cagan works the closest with this series and plays a key role in ongoing research.

The series holds a strong lineup of underlying funds, with all funds used across the series earning a Morningstar Medalist Rating as of July 2026.

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 series’ performance has been impressive. The Tax-Aware Conservative Growth and Income portfolio holds the longest track record of the three portfolios, launching as a mutual fund in May 2012. Since then, through May 2026, the F2 share class’ 8.4% annualized return handily beat the moderately conservative Morningstar Category average and Morningstar Moderately Conservative Target Risk Index’s gains of 6.1%. Risk-adjusted results were also strong, besting 98% of peers as measured by the Sharpe ratio. The Tax-Aware Growth and Income and Tax-Aware Moderate Growth and Income portfolios launched in September 2019 and have also garnered excellent results. Since inception, both portfolios’ absolute and risk-adjusted returns eclipsed their respective category averages and benchmarks.

The series has some distinguishing characteristics that have aided in performance. Due to the tax-aware mandate, each portfolio’s fixed-income sleeve comprises municipal-bond funds. Municipal bonds have generally outperformed taxable bonds over the past decade-plus, which has helped boost performance versus category peers who may hold broader bond allocations. Also, all three portfolios typically invest more in equities than the average peer in their respective categories. For example, the Tax-Aware Moderate Growth and Income portfolio’s 63% equity allocation was higher than the moderate-allocation category’s 57% average as of the March 2026 portfolio.

American FdsTaxAwrCnsrvGr&IncPortF-2's Prospectus Adjusted Expense Ratio is 0.45% per year. It places it in the cheapest quintile of the Morningstar US Fund Moderately Conservative Allocation Category, where the median fee is 0.9% per year. This cost positioning translates into a Medalist Rating Price Score of 1.89, 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.