we get into weak markets.” But not all dividend-paying companies fit into the defensive playbook.
“ If you focus on just the highest yielding companies, some of those companies are quite risky because sometimes they have weaker balance sheets or are at risk of cutting their dividends, and the market is saying with those high dividend yields that those companies aren’ t secure,” Buchbinder says.“ That’ s not the universe we’ re trying to focus on here.”
The fund can invest up to 10 % of the portfolio in non-U. S. companies, as well as up to 10 % in non-dividend payers if they have a profile of financial strength. But by and large this fund invests in U. S.- based dividend-paying businesses.
Expectations
The Capital Group Dividend Value ETF’ s performance has been near the top of Morningstar’ s U. S. large value category in each of its full three years of operation, resulting in top-quartile performance in its category during the one- and threeyear periods.
The fund’ s strategy was inherited from its predecessor vehicle, a variable annuity that launched in 2001. Buchbinder, who began with Capital Group just over 30 years ago and has worn many hats at the firm( from research analyst to research director), was part of the management team overseeing the annuity product when it was transformed into an ETF in early 2022.
This strategy’ s long track from annuity to ETF provides a picture of how this fund has behaved historically and how
Portfolio Statistics
Number Of Positions 52 P / E Ratio 20.01x Std. Dev Fund / Benchmark 12.16 / 11.42 Turnover Ratio 29.00 % Net Expense Ratio 0.33 %
AUM, performance and portfolio stats as of 3 / 31 / 26. Turnover as of 5 / 31 / 25. Standard deviation( three years) versus the Morningstar US Large-Mid Cap Broad Value TR USD index. Sources: Capital Group and Morningstar.
Manager: Chris Buchbinder Age: 54
Professional Background: He is an equity portfolio manager at Capital Group. His 30 years of investment industry experience have all been with the firm. Previously, he was an equity investment analyst at the firm covering various industries.
Outside Interests: Watching his sons play in organized sports activities. He also enjoys skiing and mountain biking.
the managers believe it will behave in the future. Buchbinder expects the fund to trail the S & P 500 in growth-led markets because it’ s not able to invest in the fastest-growing companies that don’ t pay dividends.“ But we’ ll participate in those up markets, and maybe more so than a pure-value fund would.”
On the flip side, he expects the fund to hold up better than the S & P 500 during market declines. And in a value-led market where pure-value strategies are leading, he expects to do better than the S & P 500, though maybe not as well as some of those pure-value strategies. However, he adds that pure-value strategies tend to struggle during economic recessions because they often contain a number of below-investment-grade companies.
“ We can’ t have more than 10 % of the companies in our fund below investment grade,” Buchbinder says.“ When recessions hit, those below-investment-grade companies tend to struggle, and purevalue indices tend to do poorly. We tend to do better than pure-value funds in a recessionary environment.”
Decentralized Each of the Capital Group Dividend Value ETF’ s five listed portfolio managers have autonomy over buy and sell decisions in their respective investment sleeves. They work closely with Capital Group’ s research analysts, and they’ re primarily bottom-up stock pickers.
Buchbinder, who covered various industries earlier in his career as an analyst, describes himself as a generalist with a contrarian bent who looks for out-offavor situations that he believes could be good opportunities for his portfolio.“ As a result, I’ ll sometimes buy things well but sell them after the favorable fundamentals have developed and the positive news has been fully appreciated by the market,” he explains. Sometimes, he admits, he might sell too soon.
One example is GE Aerospace, which inherited the GE ticker symbol after the spilt-up of its parent company General Electric. Buchbinder eliminated that position from his sleeve in 2025 because he felt that the positive news and fundamentals had been fully appreciated by the market. In contrast, some of the other fund managers believe the company still has intrinsic value that’ s not fully understood by the market, so they continue to hold it in their sleeves and thus the company remains a top 10 holding in the portfolio.
Product Design
Given the fund’ s strong performance and its smallish yield( even if it does top that of the S & P 500), investors may wonder whether the Capital Group Dividend Value ETF is better suited as an income or total return-type product.
“ This isn’ t designed to be a total return fund,” Buchbinder says.“ It is an income-oriented fund, and our expectation is that it will allow investors to participate in market growth on the upside but also will provide protection on the downside. If we happen to do better than the S & P in a strong year, it’ ll be driven by idiosyncratic stock selection.”
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