Model portfolios in market uncertainty
4Q24 market commentary and model portfolio asset allocation
Samir Mathur
Chair of the Portfolio Solutions Committee
Mario DiVito
Multi-asset investment director
Stanley Moy
Multi-asset investment specialist
Key takeaways for the quarter and year ended December 31, 2024
- Model portfolio asset allocation remains focused on long-term goals and investment opportunities amid geopolitical and economic risks, and potentially volatile market shifts.
- Global stocks and U.S. bonds rose for the year, despite market swings in the fourth quarter, with U.S. equities fueling gains.
- The Portfolio Solutions Committee (PSC) and Capital Solutions Group (CSG) will continue to fine-tune strategic allocations where needed in 2025 to mitigate risks and meet long-term portfolio objectives, while underlying fund managers take an active approach to company and security-specific research.
Market review
Stock markets proved volatile in the fourth quarter as investors absorbed the implications of a new president-elect in the U.S. and indications in December that the U.S. Federal Reserve might slow the pace of interest rate cuts in 2025. Despite this volatility, the S&P 500 Index rose 2.4% in the fourth quarter, extending year-to-date gains to 25%. Consumer discretionary stocks led, followed by communication services, financials and information technology — the only sectors to advance in the fourth quarter. The Russell 1000 Value Index fell 2% for the quarter, ending the year up 14.4%. By comparison, the Russell 1000 Growth Index gained 7.1% for the quarter and 33.4% for the year. Meanwhile, the MSCI All Country World Index (ACWI) ex USA declined 7.6%, finishing the year 5.5% higher.
Bond markets fell amid signs of caution from the Federal Reserve late in the year given potential for higher inflation in 2025. The Fed continued to cut rates in November and December after loosening policy in September for the first time since 2020 but indicated that it would remain watchful of inflation as a new administration takes office in January. The Bloomberg U.S. Aggregate Index fell 3.1% for the quarter, nonetheless ending 2024 1.3% higher, while the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index inched up 0.2%, taking gains for the year to 8.2%.
Quarterly model results
All comments about model composite returns versus the benchmark are true on a gross and net-of-fees basis, unless otherwise noted. All results are for the quarter unless otherwise specified.
Growth portfolios
American Funds Global Growth Model Portfolio
- Produced negative absolute returns, trailing its respective benchmark.
- U.S. and Non-U.S. equity selection helped relative results. But relatively high exposure to non-U.S. equities hampered results as international stocks lagged the U.S.
- Overall, selection in information technology and industrials was positive, while selection in consumer discretionary hurt.
- The Growth Fund of America® contributed on a relative basis, while EuroPacific Growth Fund® was a drag.
- Strong absolute returns over the year, though relative results lagged its benchmark.
American Funds Growth Model Portfolio
- Registered positive absolute and relative returns against its benchmark.
- Positive U.S. equity selection in information technology and financials outweighed negative selection in consumer discretionary.
- The Growth Fund of America was the strongest relative contributor, whereas SMALLCAP World Fund® detracted.
- U.S. stock selection drove positive absolute and relative returns over the year, but net returns trailed the benchmark.
American Funds Moderate Growth Model Portfolio
- Outpaced its respective benchmark, fueled by positive U.S. equity selection.
- Positive selection in information technology and financials outweighed negative selection in consumer discretionary.
- The Growth Fund of America contributed to relative results while SMALLCAP World Fund hurt.
- U.S. equity selection contributed to positive absolute and relative returns for the year, though net returns lagged.
Growth-and-income portfolios
American Funds Growth and Income Model Portfolio
- Posted negative absolute returns but outpaced its benchmark, bolstered by positive non-U.S. equity security selection.
- Non-U.S. investments in consumer staples were a bright spot, while positive U.S. selection in information technology helped offset negative selection in U.S. consumer discretionary.
- Within fixed income, positive choice among securitized debt and corporates tempered negative selection in Treasuries.
- The Growth Fund of America contributed to equity returns on a relative basis. American Funds Global Insight Fund and Capital World Growth and Income Fund® detracted. American Funds Multi-Sector Income Fund supported relative fixed income returns.
- Selection in information technology and industrials lifted absolute and relative returns over the year, though net returns trailed the benchmark.
American Funds Moderate Growth and Income Model Portfolio
- Lagged the respective benchmark.
- Selection in information technology boosted relative results whereas U.S. consumer discretionary hurt.
- Fixed income selection in securitized debt and corporates helped while Treasuries hurt.
- American Balanced Fund® — which we view as an anchor fund in this portfolio — provided some ballast to relative weakness from SMALLCAP World Fund and American Funds Strategic Bond Fund.
- Positive absolute results for the year, yet relative returns trailed its benchmark.
American Funds Conservative Growth and Income Model Portfolio
- Posted negative relative returns as dividend payers lagged the broader S&P 500. (The model’s objective and approach to portfolio construction focus on dividend-paying equities.)
- Less-than-benchmark exposure to information technology detracted; selection in consumer discretionary and communication services also hurt.
- Positive selection in securitized bonds helped offset negative selection in Treasuries and emerging markets debt.
- Washington Mutual Investors Fund and American High-Income Trust® were some of the stronger underlying relative contributors whereas American Mutual Fund® and American Funds Emerging Markets Bond Fund® detracted.
- Absolute returns for the year were positive, but lagged the benchmark.
American Funds Conservative Income and Growth Model Portfolio
- Trailed respective benchmark, weighed down by negative U.S. equity security selection.
- Negative selection in consumer discretionary and industrials was offset by positive selection in information technology and financials.
- Positive selection in securitized debt helped offset negative selection in Treasuries.
- Despite positive absolute returns for the year, net relative results trailed as dividend payers were a headwind. This model emphasizes dividend-paying equities, which aim to help the portfolio’s success metrics of high current income and lower volatility.
Preservation and income portfolios
American Funds Conservative Income Model Portfolio
- Trailed respective benchmark over the quarter, hurt by negative U.S. equity selection.
- Positive selection in the information technology sector was outweighed by selection in consumer discretionary.
- Fixed income selection detracted, particularly Treasuries.
- The model’s focus on dividend-paying equities was largely a headwind to relative results over the year.
American Funds Preservation Model Portfolio
- Gross returns outpaced the benchmark but net returns lagged for the quarter and year.
- Positive selection in securitized debt countered negative selection in Treasuries over both time frames.
Retirement income models
American Funds Retirement Income models
- Posted negative absolute returns for the quarter, with the Enhanced model outpacing its benchmark on a gross basis, while net returns trailed; relative returns for the Moderate and Conservative models lagged.
- Greater exposure to equities, particularly financials, aided relative returns while dividend exposure weighed on relative returns.
- In fixed income, exposure to high-yield bonds helped, while less exposure to shorter duration fixed income detracted. American Funds Strategic Bond Fund weighed on relative results for Moderate and Conservative, but American Funds Multi-Sector Income Fund boosted the fixed income portions of all three portfolios.
- Absolute returns for all models were positive for the year. Net and gross relative returns for the Enhanced model outpaced the benchmark for the year. Net returns for the Moderate and Conservative models lagged their benchmark for the year.
Tax-aware model portfolios
- Tax-Aware Moderate Growth Model Portfolio outpaced its benchmark, driven by U.S. equity selection, especially information technology and consumer discretionary. Gross results outpaced for the year but net returns trailed.
- Growth-and-income portfolios trailed their respective benchmarks, except gross returns for Tax-Aware Growth and Income outpaced. Selection in industrials and consumer discretionary hampered relative returns across all tax-aware growth-and-income models. Absolute returns for the growth-and-income models were positive for the year, but relative net results trailed.
- Income and preservation model portfolios trailed their benchmarks, though gross returns for Tax-Exempt Preservation held up better than its benchmark. Security selection in municipal fixed income was strong over the quarter and year in all three models, but selection in general obligation hurt quarterly relative results. Net returns for these models lagged for the year.
Why an active approach matters in times of transition
Featuring perspective from our investment team on navigating the change in U.S. administration
Active insights on political developments and policy shifts
We know that politics is top of mind for many clients as we look to assess policy shifts and any likely implications of a new presidency on the economy.
“An active, research-based approach can help during these significant periods of change,” says Stanley Moy, multi-asset investment specialist. This is where the far-reaching benefits of The Capital System™ can make a difference, with its focus on collaborative research, diverse perspectives and long-term thinking. (Chief Investment Officer Martin Romo describes The Capital System as a jazz band, where managers can be flexible and adapt to a range of scenarios.) “We believe that acknowledging the potential for multiple scenarios is a critical aspect of active investment research and especially crucial through this transition,” Moy adds.
Capital Group has a government relations team based in Washington D.C., as well as political economists, former policy advisors and diplomats who are part of a broader global research network. These perspectives help contribute to an understanding of specific impacts on certain sectors and companies, along with insights from Capital’s macro research team.
Active, bottom-up company research
“We invest in companies, not regions or sectors,” according to multi-asset investment director Mario DiVito. “Instead of anchoring investments on any one singular macro scenario, our investment teams assess the likelihood of certain implications for specific company risks and opportunities,” adds DiVito.
Equity portfolio managers remain constructive on the long-term opportunities in artificial intelligence across various sectors and industries. Meanwhile, some managers favor mid-size banks, given a positive view on the U.S. economy, the potential for stable interest rates, and decreased regulations. In fixed income, managers are finding selective opportunities in corporates and high yield as well as securitized debt.
Active approach to allocation changes
Strategic top-down changes are also a key part of our active approach.
This year, in our growth model portfolios, we fine-tuned strategic allocations by broadening exposure to a more diversified range of companies across regions and sectors. In fixed income, the PSC increased exposure to emerging markets debt in several growth-and-income portfolios to complement multi-sector allocations. Meanwhile, in retirement income portfolios, the team increased allocations to both high dividend payers and dividend growers outside the U.S.
“It is very important to stay focused on long-term objectives through periods of change like this, while keeping a close eye on opportunities and risks,” says Chairman of the Portfolio Solutions Committee, Samir Mathur. “This is where an active approach to investing and underlying fund flexibility comes in.” Mathur continues. “At the strategic level, we remain vigilant about monitoring portfolios and making adjustments, where needed, to avoid the key risk of not meeting portfolio objectives.” In the coming year, we will also continue to adjust and expand our model portfolio offerings to meet client-specific needs and preferences.
American Funds Model Portfolios allocation highlights 2024
- Increased Capital Income Builder® exposure across the retirement income portfolios in April 2024
- Added an allocation to American Funds Global Insight Fund in the Global Growth, Moderate Growth, and Growth and Income portfolios in May 2024
- Introduced an allocation to American Funds Emerging Markets Bond Fund in the Conservative Growth & Income and Conservative Income & Growth portfolios in May 2024
- Introduced or enhanced allocations to five active ETFs in tax-aware models in July 2024 to support model goals and enhance tax efficiency, including:
- CGGO — Capital Group Global Growth Equity ETF
- CGDV — Capital Group Dividend Value ETF
- CGDG — Capital Group Dividend Growers ETF
- CGMU — Capital Group Municipal Income ETF
- CGSM — Capital Group Short Duration Municipal Income ETF
Looking ahead
Balancing risk and opportunities is a key theme for 2025, given a range of potential market and economic scenarios. “There are reasons to be optimistic about the investment outlook — but we must also be prepared for a (possible) downturn,” according to Martin Romo in our Capital Ideas' 2025 Outlook. Overall, we expect to see a broadening of equity markets following periods of heavy concentration, as artificial intelligence (AI) helps fuel developments across sectors. Dividends are another highlight, given the potential for strong cash flows and attractive valuations as well as their historical ability to protect in down markets.
We expect bonds to play a significant role as interest rates normalize, offering possible diversification and stability. Higher income bonds should also be an area of opportunity. “The risks … are not going away,” continues Romo, “which is why we put an emphasis on fundamental research, conducted by our portfolio managers and analysts around the world.”
Advisory services offered through Capital Research Management Company (CRMC) and its RIA affiliates.
Results as of December 31, 2024. Past results are not predictive of results in future periods. For current information and month–end results, visit capitalgroup.com. Composite returns reflect changes, if any, in the underlying fund allocations over the model’s lifetime. Underlying funds may have been added or removed during a model’s lifetime. Rebalancing is performed in accordance with the investment adviser’s strategic asset allocation views for the model. Please refer to capitalgroup.com/advisor/investments/ model-portfolios.htm for historical underlying fund allocations. Composite net results are calculated by subtracting an annual 3% fee (which is equal to or higher than the highest actual model portfolio wrap fee charged by a program sponsor) from the gross composite monthly returns, which are net of underlying mutual fund fees and expenses. Composite gross results are net of underlying mutual fund fees and expenses and gross of any advisory fees charged by model providers. Results would have been lower if such fees had been deducted. Results and results-based figures shown are preliminary and subject to change.
Investments are not FDIC–insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Contribution to returns commentary is based on representative accounts of the model composites and is net of all fees and expenses applicable to the underlying funds and gross of any advisory fee charged by model providers. The net of fees composite results shown illustrate the impact of fees on the portfolio. Attribution for underlying ETFs is based on market price.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. Returns for one year or less are not annualized, but calculated as cumulative total returns.
When applicable, investment results reflect fee waivers and/or expense reimbursements, without which results would have been lower. Read details about how waivers and/or reimbursements affect the results for each fund. View results and yields without fee waiver and/or expense reimbursement.
There may have been periods when the results lagged the index(es). Certain market indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
Model portfolios are subject to the risks associated with the underlying funds in the model portfolio. Investors should carefully consider investment objectives, risks, fees and expenses of the funds in the model portfolio, which are contained in the fund prospectuses. Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. Smaller company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. The use of derivatives involves a variety of risks, which may be different from, or greater than, the risks associated with investing in traditional cash securities, such as stocks and bonds. A nondiversified fund has the ability to invest a larger percentage of assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor results by a single issuer could adversely affect fund results more than if the fund were invested in a larger number of issuers. See the applicable prospectus for details.
Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness. If agency ratings differ, the security will be considered to have received the highest of those ratings, consistent with the portfolio's investment policies. Securities in the Unrated category have not been rated by a rating agency; however, the investment adviser performs its own credit analysis and assigns comparable ratings that are used for compliance with applicable investment policies.
For more information about the risks associated with each investment, go to its detailed information page or read the prospectus, if applicable.
Portfolios are managed, so holdings will change.
Model portfolios are provided to financial intermediaries who may or may not recommend them to clients. These portfolios consist of an allocation of funds for investors to consider and are not intended to be investment recommendations. The portfolios are asset allocations designed for individuals with different time horizons investment objectives and risk profiles. Allocations may change and may not achieve investment objectives. If a cash allocation is not reflected in a model, the intermediary may choose to add one. Capital Group does not have investment discretion or authority over investment allocations in client accounts. Investors should talk to their financial professional for information on other investment alternatives that may be available. In making investment decisions, investors should consider their other assets, income and investments. Visit capitalgroup.com for current allocations.
The underlying funds for each model portfolio as of September 30, 2024, are as follows (allocations may not equal 100% due to rounding):
American Funds Global Growth Model Portfolio: Growth (85%): SMALLCAP World Fund 15%, The New Economy Fund 15%, EuroPacific Growth Fund 8%, The Growth Fund of America 15%, New Perspective Fund 20%, New World Fund 7%, American Funds Global Insight Fund 5%; Growth and income (15%): Capital World Growth and Income Fund 15%.
American Funds Growth Model Portfolio: Growth (80%): SMALLCAP World Fund 15%, The New Economy Fund 10%, The Growth Fund of America 25%, New Perspective Fund 15%, AMCAP Fund 15%; Growth and income (20%): Fundamental Investors 10%, The Investment Company of America 10%.
American Funds Moderate Growth Model Portfolio: Growth (45%): SMALLCAP World Fund 10%, The Growth Fund of America 20%, AMCAP Fund 10%, American Funds Global Insight Fund 5%; Growth and income (35%): Fundamental Investors 10%, Capital World Growth and Income Fund 15%, The Investment Company of America 10%; Balanced (20%): American Funds Global Balanced Fund 10%, American Balanced Fund 10%.
American Funds Growth and Income Model Portfolio: Growth (20%): SMALLCAP World Fund 8%, The Growth Fund of America 7%, American Funds Global Insight Fund 5%; Growth and income (45%): Capital World Growth and Income Fund 15%, The Investment Company of America 20%, Washington Mutual Investors Fund 10%; Equity Income (10%): Capital Income Builder 10%; Balanced (10%): American Balanced Fund 10%; Bond (15%): The Bond Fund of America 5%, American Funds Strategic Bond Fund 5%, American Funds Multi-Sector Income Fund 5%.
American Funds Moderate Growth and Income Model Portfolio: Growth (10%): SMALLCAP World Fund 5%, New Perspective Fund 5%; Growth and income (25%): Capital World Growth and Income Fund 10%, Washington Mutual Investors Fund 15%; Equity Income: (10%): The Income Fund of America 10%; Balanced (40%): American Funds Global Balanced Fund 15%, American Balanced Fund 25%; Bond (15%): The Bond Fund of America 5%, American Funds Multi-Sector Income Fund 5%, American Funds Strategic Bond Fund 5%.
American Funds Conservative Growth and Income Model Portfolio: Growth and income (27%): Washington Mutual Investors Fund 10%, American Mutual Fund 10%, Capital World Growth and Income Fund 7%; Equity Income (30%): Capital Income Builder 15%, The Income Fund of America 15%; Bond (43%): American High-Income Trust 10%, American Funds Multi-Sector Income Fund 15%, The Bond Fund of America 15%, American Funds Emerging Markets Bond Fund 3%.
American Funds Conservative Income and Growth Model Portfolio: Growth and income (20%): Capital World Growth and Income Fund 5%, American Mutual Fund 15%; Equity income (10%): The Income Fund of America 10%; Balanced (15%): American Funds Global Balanced Fund 5%, American Balanced Fund 10%; Bond (55%): American Funds Multi-Sector Income Fund 14%, American Funds Strategic Bond Fund 10%, The Bond Fund of America 19%, Intermediate Bond Fund of America 10%, American Funds Emerging Markets Bond Fund 2%.
American Funds Conservative Income Model Portfolio: Growth and income (10%): American Mutual Fund 10%; Equity Income (10%): The Income Fund of America 10%; Balanced (5%): American Balanced Fund 5%; Bond (75%): The Bond Fund of America 20%, American Funds Strategic Bond Fund 10%, American Funds Multi-Sector Income Fund 5%, Intermediate Bond Fund of America 25%, Short-Term Bond Fund of America 15%.
American Funds Preservation Model Portfolio: Bond (100%): Intermediate Bond Fund of America 45%, Short-Term Bond Fund of America 55%.
American Funds Retirement Income Model Portfolio — Enhanced: Growth (5%): AMCAP Fund 5%; Growth and income (15%): Capital World Growth and Income Fund 10%, American Mutual Fund 5%; Equity Income (38%): Capital Income Builder 18%, The Income Fund of America 20%; Balanced (25%): American Funds Global Balanced Fund 5%, American Balanced Fund 20%; Bond (17%): American High-Income Trust 5%, American Funds Multi-Sector Income Fund 7%, The Bond Fund of America 5%.
American Funds Retirement Income Model Portfolio — Moderate: Growth and income (12%): Capital World Growth and Income Fund 7%, American Mutual Fund 5%; Equity Income (38%): Capital Income Builder 18%, The Income Fund of America 20%; Balanced (20%): American Funds Global Balanced Fund 5%, American Balanced Fund 15%, Bond (30%): American Funds Multi-Sector Income Fund 9%, The Bond Fund of America 8%, American Funds Strategic Bond Fund 6%, U.S. Government Securities Fund 7%.
American Funds Retirement Income Model Portfolio — Conservative: Growth and income (7%): American Mutual Fund 7%; Equity income (33%): Capital Income Builder 18%, The Income Fund of America 15%; Balanced (12%): American Funds Global Balanced Fund 4%, American Balanced Fund 8%; Bond (48%): American Funds Inflation Linked Bond Fund 5%, The Bond Fund of America 15%, American Funds Strategic Bond Fund 10%, American Funds Multi-Sector Income Fund 8%, Intermediate Bond Fund of America 5%, U.S. Government Securities Fund 5%.
American Funds Tax-Aware Moderate Growth Model Portfolio: Growth (44%): SMALLCAP World Fund 10%, CGGR − Capital Group Growth ETF 25%, CGGO − Capital Group Global Growth Equity ETF 4%; American Funds Global Insight Fund 5% Growth and income (45%): Capital World Growth and Income Fund 20%; CGUS − Capital Group Core Equity ETF 25%; Bond (11%): CGMU − Capital Group Municipal Income ETF 6%, American High-Income Municipal Bond Fund 5%.
American Funds Tax-Aware Growth and Income Model Portfolio: Growth (20%): SMALLCAP World Fund 8%, CGGR − Capital Group Growth ETF 7%, CGGO − Capital Group Global Growth Equity ETF 5%; Growth and income (60%): Capital World Growth and Income Fund 20%, CGUS − Capital Group Core Equity ETF 25%, CGDV − Capital Group Dividend Value ETF 15%; Bond (20%): American High-Income Municipal Bond Fund 10%, CGMU − Capital Group Municipal Income ETF 10%.
American Funds Tax-Aware Moderate Growth and Income Model Portfolio: Growth (10%): SMALLCAP World Fund 5%, CGGO − Capital Group Global Growth Equity ETF 5%; Growth and income (55%): Capital World Growth and Income Fund 15%, CGUS − Capital Group Core Equity ETF 15%, CGDV — Capital Group Dividend Value ETF 20%, CGDG — Capital Group Dividend Growers ETF 5%; Bond (35%): American High-Income Municipal Bond Fund 20%, CGMU — Capital Group Municipal Income ETF 15%.
American Funds Tax-Aware Conservative Growth and Income Model Portfolio: Growth and income (51%): Capital World Growth and Income Fund 15%, CGDV − Capital Group Dividend Value ETF 16%, CGDG − Capital Group Dividend Growers ETF 10%, American Mutual Fund 10%; Bond (49%): American High-Income Municipal Bond Fund 25%, CGMU − Capital Group Municipal Income ETF 20%, CGSM − Capital Group Short Duration Municipal Income ETF 4%.
American Funds Tax-Aware Moderate Income Model Portfolio: Growth and income (40%): Capital World Growth and Income Fund 10%, CGDV − Capital Group Dividend Value ETF 15%, American Mutual Fund 10%, CGDG − Capital Group Dividend Growers ETF 5%; Bond (60%): American High-Income Municipal Bond Fund 20%, CGMU − Capital Group Municipal Income ETF 25%, CGSM − Capital Group Short Duration Municipal Income ETF 10%, American Funds Short-Term Tax-Exempt Bond Fund 5%.
American Funds Tax-Aware Conservative Income Model Portfolio: Growth and income (19%): CGDG − Capital Group Dividend Growers ETF 5%, CGDV − Capital Group Dividend Value ETF 9%, American Mutual Fund 5%; Bond (81%): American High-Income Municipal Bond Fund 15%, CGMU − Capital Group Municipal Income ETF 25%, CGSM − Capital Group Short Duration Municipal Income ETF 25%, American Funds Short-Term Tax-Exempt Bond Fund 16%.
American Funds Tax-Exempt Preservation Model Portfolio: Bond (100%): Limited-Term Tax-Exempt Bond Fund of America 40%, CGSM — Capital Group Short Duration Municipal Income ETF 30%, American Funds Short-Term Tax-Exempt Bond Fund 30%.
Model portfolio index/index blends
Global Growth — MSCI ACWI.
Growth — Index Blend: 75% S&P 500 and 25% MSCI ACWI ex USA indexes.
Moderate Growth — Index Blend: 60% S&P 500, 25% MSCI ACWI ex USA and 15% Bloomberg U.S. Aggregate indexes.
Growth and Income — Index Blend: 50% S&P 500, 25% MSCI ACWI ex USA and 25% Bloomberg U.S. Aggregate indexes.
Moderate Growth and Income — Index Blend: 45% S&P 500, 35% Bloomberg U.S. Aggregate and 20% MSCI ACWI ex USA indexes.
Conservative Growth and Income — Index Blend: 35% S&P 500, 35% Bloomberg U.S. Aggregate, 15% MSCI ACWI ex USA and 15% Bloomberg U.S. Corporate High Yield 2% Issuer Capped indexes.
Conservative Income and Growth — Index Blend: 25% S&P 500, 65% Bloomberg U.S. Aggregate and 10% MSCI ACWI ex USA indexes.
Retirement Income portfolios — S&P Target Date Retirement Income index.
Conservative Income — Index Blend: 50% Bloomberg U.S. Aggregate Index, 30% Bloomberg U.S. Government/Credit (1-3 years, ex BBB) Index and 20% S&P 500 indexes.
Tax-Aware Moderate Growth — Index Blend: 60% S&P 500, 25% MSCI ACWI ex USA and 15% Bloomberg Municipal Bond indexes.
Preservation — Bloomberg 1-5 Years U.S. Government/Credit A+ Index.
Tax-Aware Growth and Income — Index Blend: 25% Bloomberg Municipal Bond, 50% S&P 500 and 25% MSCI ACWI ex USA indexes.
Tax-Aware Moderate Growth and Income — Index Blend: 45% S&P 500, 35% Bloomberg Municipal Bond and 20% MSCI ACWI ex USA indexes.
Tax-Aware Conservative Growth and Income — Index Blend: 35% Bloomberg Municipal Bond, 35% S&P 500, 15% Bloomberg High Yield Municipal and 15% MSCI ACWI ex USA indexes.
Tax-Aware Moderate Income — Index Blend: 65% Bloomberg Municipal Bond, 25% S&P 500 and 10% MSCI ACWI ex USA indexes.
Tax-Aware Conservative Income — Index Blend: 40% Bloomberg Municipal Bond, 40% Bloomberg Municipal 1–7 Years Blend and 20% S&P 500 indexes.
Tax-Exempt Preservation — Bloomberg Municipal Bond 1–7 Years Blend.
The index blends are rebalanced monthly. MSCI index results reflect dividends gross of withholding taxes through 12/31/00 and dividends net of withholding taxes thereafter. The indexes are unmanaged, and their results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes. Investors cannot invest directly in an index. There have been periods when the model portfolio has lagged the index/index blend.
S&P 500 Index is a market capitalization–weighted index based on the results of approximately 500 widely held common stocks.
The S&P Target Date Retirement Income Index, a component of the S&P Target Date Index Series, has an asset allocation and glide path that represent a market consensus across the universe of target date fund managers.
The S&P 500 Index and S&P Target Date Retirement Income Index are products of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2024 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC.
MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market results in the global developed and emerging markets, consisting of more than 40 developed and emerging market country indexes. Results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter.
MSCI All Country World ex USA Index is a free float–adjusted market capitalization weighted index that is designed to measure equity market results in the global developed and emerging markets, excluding the United States. The index consists of more than 40 developed and emerging market country indexes. Results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter.
MSCI has not approved, reviewed or produced this report, makes no express or implied warranties or representations and is not liable whatsoever for any data in the report. You may not redistribute the MSCI data or use it as a basis for other indices or investment products.
Bloomberg U.S. Aggregate Index represents the U.S. investment–grade fixed–rate bond market.
Bloomberg U.S. Corporate Investment Grade Index represents the universe of investment grade, publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements.
Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index covers the universe of fixed–rate, non–investment–grade debt. The index limits the maximum exposure of any one issuer to 2%.
Bloomberg High Yield Municipal Bond Index is a market–value–weighted index composed of municipal bonds rated below BBB/Baa.
Bloomberg Municipal Bond Index is a market–value–weighted index designed to represent the long–term investment–grade tax–exempt bond market.
Bloomberg Municipal Bond 1–7 Year Blend Index is a market–value–weighted index that includes investment–grade tax–exempt bonds with maturities of one to seven years.
Bloomberg 1-3 Year U.S. Government/Credit Index is a market-value weighted index that tracks the total return results of fixed-rate, publicly placed, dollar-denominated obligations issued by the U.S. Treasury, U.S. government agencies, quasi-federal corporations, corporate or foreign debt guaranteed by the U.S. government, and U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements, with maturities of one to three years.
Bloomberg 1–5 Year U.S. Government/Credit A+ Index is a market–value weighted index that tracks the total return results of fixed–rate, publicly placed, dollar–denominated obligations issued by the U.S. Treasury, U.S. government agencies, quasi–federal corporations, corporate or foreign debt guaranteed by the U.S. government, and U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements, with maturities of one to five years, including A–rated securities and above.
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Capital market assumptions are long-term projections of the future performance of asset class returns based on their respective benchmark indexes or other proxies that incorporate analysis and observations. This analysis represents the views of a small group of investment professionals based on their individual research and are approved by the Capital Market Assumptions Oversight Committee. They should not be interpreted as the view of Capital Group as a whole. As Capital Group employs The Capital SystemTM, the views of other individual analysts and portfolio managers may differ from those presented here. They are provided for informational purposes only and are not intended to provide any assurance or promise of actual returns. They reflect long-term projections of asset class returns and are based on the respective benchmark indexes, or other proxies, and therefore do not include any outperformance gain or loss that may result from active portfolio management. Note that the actual results will be affected by any adjustments to the mix of asset classes. All market forecasts are subject to a wide margin of error.
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