Capital Group Global Developed Equity
Mandate commentary
Q2 2026
Highlights
① The mandate returned 15.15%, outperforming the MSCI World Index by 1.39 percentage points, driven by strong IT stock selection.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
Global equities rebounded sharply during the second quarter, supported by solid corporate earnings, strength in semiconductor companies and easing geopolitical tensions. The United States generated the strongest return among developed markets, while Japan and Europe also advanced. Information technology led at the sector level, as semiconductor and other artificial intelligence-related companies benefited from expectations for continued spending on data centres and computing infrastructure. Energy lagged, as oil prices retreated from multi-year highs.
Strong stock selection was the primary driver of relative performance. Information technology contributed most, led by semiconductor and semiconductor-equipment holdings. Industrials and communication services also added value, while lighter exposure to energy and consumer staples, together with positive stock selection in consumer staples, further supported relative results.
Mandate: Capital Group Global Developed Equity Stock
Performance contributors
KLA Corporation was the largest contributor to relative performance, adding approximately 1.12 percentage points. Its shares advanced amid optimism surrounding AI-driven semiconductor and process-control spending. Fiscal third-quarter results and guidance exceeded consensus expectations, supported by strong demand across advanced logic, memory and packaging applications associated with AI infrastructure.
Taiwan Semiconductor Manufacturing Company was the second-largest contributor, adding approximately 1.04 percentage points. Its shares reached record highs amid continued demand for AI-computing capacity. First-quarter results and full-year 2026 revenue guidance exceeded consensus expectations, while a regulatory change in Taiwan that relaxed single-stock investment limits provided additional support.
Performance detractors
The mandate’s lack of exposure to Advanced Micro Devices was the largest security-level detractor, reducing relative performance by approximately 0.71 percentage points, as the company’s shares advanced sharply during the quarter.
Cash holdings were the second-largest detractor from relative performance, reducing returns by approximately 0.64 percentage points, as the portfolio’s cash position created a headwind during the strong market advance.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
CAPITAL GROUP GLOBAL DEVELOPED EQUITY | 15.15
| 10.66
| 21.57
| 21.39
|
Mandate repositioning
The portfolio remains focused on its dual objectives of prudent capital growth and conservation of principal. Portfolio construction continues on a company-by-company basis, emphasizing businesses with strong balance sheets, dividend payments and characteristics associated with long-term growth and resilience during market declines.
Information technology represents the portfolio’s largest absolute sector allocation and is overweight relative to the benchmark, with semiconductor and semiconductor-equipment companies remaining a key area of investment. Industrials remains one of the portfolio’s largest absolute allocations and its largest overweight relative to the benchmark, with aerospace and defence representing an important area of focus.
Health care remains underweight after its allocation declined from more than 16% in 2023 to approximately 6% at quarter-end. The United States remains the portfolio’s largest country exposure but is significantly underweight relative to the benchmark. Cash holdings remain below 4%.
Market overview: earnings strength helped markets absorb uncertainty
The second quarter of 2026 reinforced the resilience of financial markets. Investors faced conflict in the Middle East, commodity-price volatility, shifting interest-rate expectations and renewed inflation concerns, yet global equities continued to advance as corporate earnings and economic activity remained stronger than expected. The S&P 500 gained 14.9% in U.S.-dollar terms for the quarter, while the S&P/TSX Composite Index advanced 6.4%, supported by healthier earnings expectations and improving market breadth.
Canadian equities were led by a strong rebound in financials, as better-than-expected bank earnings, resilient credit quality and improved capital markets activity lifted sentiment. U.S. equities were supported by earnings strength rather than a simple risk-on rally, with Information Technology leading as AI infrastructure spending continued to anchor sentiment. International equities also contributed meaningfully, with emerging markets Korea and Taiwan benefitting from demand across the global technology supply chain.
Market outlook: valuations and rates make selectivity more important
Markets enter the second half of 2026 with fundamentals remaining broadly supportive, although elevated equity valuations leave less room for error. Earnings growth is likely to remain the key driver of returns, while inflation trends, central bank policy and interest-rate expectations will continue to shape market sentiment.
Across asset classes, diversification remains important. Canadian, international and emerging market equities offer exposure to distinct sources of growth, while higher yields in fixed income continue to provide a cushion against volatility. Selectivity remains key as investors balance opportunities against valuation and policy risks.
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This commentary may contain forward-looking information, which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 30, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised, whether as a result of new information, changing circumstances, future events or otherwise.
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