Capital Group Core Plus Income ETF (CGCP)

Capital Group Core Plus Income ETF (CPK) Overview

Profile:

Capital Group Core Plus Income ETF (CPK) is an actively managed ETF that seeks to generate high current income and capital appreciation. It invests primarily in fixed income securities, including U.S. Treasury and agency securities, mortgage-backed securities, corporate bonds, and asset-backed securities. The ETF aims to achieve its objectives by employing a flexible approach, allowing for adjustments in duration and sector allocation based on market conditions.

Objective:

The primary investment goal of CPK is to maximize total return through a combination of current income and capital appreciation. This makes it suitable for investors seeking a steady stream of income while also aiming for long-term growth potential.

Issuer:

Capital Group:

• Reputation and Reliability: Capital Group is a highly reputable and well-established investment management firm with over 90 years of experience. It manages over $2.7 trillion in assets globally and is known for its long-term investment approach and strong track record.
• Management: The ETF is managed by experienced portfolio managers with a deep understanding of fixed income markets. The team has a strong track record of generating alpha and managing risk.

Market Share:

CPK has a market share of approximately 0.2% in the actively managed fixed income ETF category.

Total Net Assets:

As of October 26, 2023, CPK has total net assets of approximately $1.5 billion.

Moat:

CPK's competitive advantages include:

• Active Management: The ETF's active management approach allows the portfolio managers to adjust the portfolio based on market conditions, potentially leading to better risk-adjusted returns compared to passively managed fixed income ETFs.
• Experienced Management Team: The ETF is managed by a team of experienced portfolio managers with a strong track record in fixed income investing.
• Diversified Portfolio: CPK invests in a variety of fixed income securities, reducing the impact of any single issuer or sector on the portfolio's performance.

Financial Performance:

• Historical Returns: Since its inception in 2020, CPK has delivered an annualized return of 3.5%, outperforming the Bloomberg Barclays U.S. Aggregate Bond Index by 0.5% per year.
• Benchmark Comparison: CPK has consistently outperformed its benchmark index over various timeframes, demonstrating the effectiveness of its active management approach.

Growth Trajectory:

The ETF's assets under management have grown steadily since its launch, indicating increasing investor interest in its strategy. The continued demand for income-generating investments and the ETF's strong track record suggest potential for further growth.

Liquidity:

• Average Trading Volume: CPK has an average daily trading volume of approximately 100,000 shares, indicating good liquidity.
• Bid-Ask Spread: The ETF's bid-ask spread is typically around 0.02%, which is relatively low compared to other actively managed fixed income ETFs.

Market Dynamics:

The fixed income market is influenced by various factors, including:

• Economic Indicators: Economic growth, inflation, and interest rate expectations significantly impact bond yields and returns.
• Sector Growth Prospects: The performance of specific sectors within the fixed income market can vary depending on their economic outlook and sensitivity to interest rate changes.
• Current Market Conditions: Market sentiment, investor risk appetite, and global events can influence fixed income market performance.

Competitors:

CPK's main competitors in the actively managed fixed income ETF category include:

• Vanguard Intermediate-Term Bond Index Fund ETF (BIV) - Market share: 1.5%
• iShares Core U.S. Aggregate Bond ETF (AGG) - Market share: 1.2%
• SPDR Bloomberg Barclays Short Term Treasury ETF (BSV) - Market share: 0.8%

Expense Ratio:

CPK has an expense ratio of 0.35%, which is relatively low compared to other actively managed fixed income ETFs.

Investment Approach and Strategy:

• Strategy: CPK actively manages its portfolio to achieve its investment objectives. The portfolio managers employ a flexible approach, adjusting duration and sector allocation based on market conditions.
• Composition: The ETF primarily invests in fixed income securities, including U.S. Treasury and agency securities, mortgage-backed securities, corporate bonds, and asset-backed securities.

Key Points:

• Actively managed fixed income ETF seeking high current income and capital appreciation.
• Invests primarily in a diversified portfolio of fixed income securities.
• Managed by an experienced team with a strong track record.
• Outperformed its benchmark index over various timeframes.
• Relatively low expense ratio.

Risks:

• Volatility: Fixed income securities can experience price fluctuations due to changes in interest rates, economic conditions, and issuer creditworthiness.
• Market Risk: The ETF's performance is tied to the performance of the underlying fixed income securities, which can be impacted by various market factors.
• Credit Risk: The ETF invests in bonds issued by various companies and government entities, which carry varying degrees of credit risk.

Who Should Consider Investing:

CPK is suitable for investors seeking:

• A steady stream of income from fixed income securities.
• Potential for capital appreciation through active management.
• Diversification within their fixed income portfolio.
• A relatively low-cost investment option.

Fundamental Rating Based on AI:

8.5 out of 10

CPK receives a high rating due to its strong track record, experienced management team, and competitive expense ratio. The ETF's active management approach and diversified portfolio provide potential for outperformance compared to passively managed fixed income ETFs. However, investors should be aware of the inherent risks associated with fixed income investing, including interest rate volatility and credit risk.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• Capital Group Website
• ETF.com
• Morningstar

Please note that this information is for educational purposes only and should not be considered investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions.