Capital Group Global Developed Equity
Mandate commentary
Q3 2026
Highlights
① Global equities rose modestly, but technology stock selection led the portfolio to return -0.61%, trailing MSCI World’s 1.88%.
② Earnings growth provided a powerful tailwind for equities.
③ Inflation, energy costs pushed long-term yields higher.
Mandate overview
The strategy seeks prudent capital growth and principal conservation by investing mainly in developed-market companies with durable growth characteristics, strong balance sheets and dividend support. Portfolio construction is company-led rather than driven by macroeconomic forecasts, with an emphasis on resilience and a smoother return profile over a full market cycle. Information technology and industrials are the largest exposures, while the portfolio maintains lower U.S. and health care weights than the MSCI World Index.
The composite returned -0.61% gross in Q3, versus 1.88% for the MSCI World Index. Relative results were led lower by information technology stock selection, with industrials and the smaller energy exposure also detracting. Financials provided the strongest sector contribution, supported by effective bank and financial-services selection.
Mandate
Performance contributors
DBS Group contributed 0.29%, supported by better-than-expected results and strength in wealth management and trading income.
SAP contributed 0.20% as easing AI-displacement concerns and robust cloud revenue reinforced confidence in its transition.
Performance detractors
KLA detracted 0.53% as profit-taking and concerns about the sustainability of AI infrastructure spending pressured shares.
GE Aerospace detracted 0.44% amid profit-taking and concerns that higher oil prices could pressure airline demand.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
CAPITAL GROUP GLOBAL DEVELOPED EQUITY | -0.61
| 9.99
| 13.95
| 17.32
|
Mandate positioning
During Q3, the portfolio added most to SK hynix, UniCredit, Merck, AbbVie and Paychex, while reducing or exiting ABB, Amgen, Munich Re, ASML and AstraZeneca. Information technology remains the largest exposure, with semiconductors a key focus, while industrials remain the largest overweight due to aerospace and defence opportunities. The managers continue to adjust holdings company by company, balancing long-term growth opportunities with resilience and liquidity for new ideas.
Market overview: earnings growth provided a powerful tailwind for equities
The third quarter showed that the current business cycle still has support, but risks have shifted. Growth held up, earnings improved and corporate investment remained firm, but higher oil prices, persistent inflation and rising long-term yields made the path forward less certain. Equities advanced as earnings provided fundamental support, even as higher rates raised the bar for further gains.
Canadian equities benefited from gains in resources and financials. Higher oil prices supported energy, while precious-metals companies were among the strongest performers. Bank earnings were supported by capital-markets activity, trading income and contained credit costs. U.S. equities also advanced, supported by strong earnings and continued technology investment. Higher yields weighed on more rate-sensitive areas.
International markets remained constructive overall, with parts of Asia benefiting from continued demand across the AI technology supply chain. Fixed income faced greater pressure as rising government bond yields outweighed coupon income, while credit remained comparatively resilient. Across markets, the central tension increasingly became earnings strength versus higher inflation and interest rates.
Market outlook: inflation, energy costs pushed long-term yields higher
With the recent earnings strength, the bar for market performance is higher. U.S. valuations are at the upper end of their historical range and have come under pressure from higher bond yields. Investor sentiment points to strong earnings growth going-forward, which could support equities in the near term, but the magnitude of gains may be muted.
The U.S. Federal Reserve and Bank of Canada each face two rate decisions this year, and persistent inflation has shifted central banks toward a tighter policy stance. Long-term yields remain a pressure point for equities, while also improving the income available from bonds.
The U.S. midterms may add to market volatility, but the path forward will be shaped by the economic cycle, inflation and interest rates.
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