HEAD-TO-HEAD: Capital Group versus JP Morgan

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Barbara Claus, Morningstar

Introduction

If the economic and investment outlook seems more confused, fuzzy and unstable than usual, then a mixed (or multi) asset fund can be a good way to hedge your bets. It splits you money across a range of different asset classes, providing diversification to mitigate risks and often balancing capital growth potential with reliable sources of income.

There are many different types of mixed asset funds available to retail investors: some have larger weightings to safe government and investment grade bonds, which cater for more cautious investors; others have greater concentration in equities or emerging markets with growth potential, which are better suited to investors who are prepared to take on more risk.

A clear advantage is that investors benefit from the expertise of asset class specialists. A mixed fund’s individual stock and bond selections are typically made by dedicated equity and fixed income portfolio managers, with the overall allocation weightings determined by a lead fund manager. Effective teamwork is a key ingredient of a successful mixed asset fund, according to analysts.

In order to provide clarity as to how best to assess a mixed asset fund, FSA asked Barbara Claus, senior analyst at Morningstar, to compare two mixed asset products: the Capital Group Gobal Allocation Fund and the JP Morgan Global Income Fund.

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