American Funds Capital Income Builder A (CAIBX) Fund

American Funds Capital Income Builder A Fund (CAIBX) is a balanced mutual fund. This American Funds fund invests in stocks and bonds around the world. This post provides the fund review in details.

One of the advantages to invest in balanced mutual fund is investor can get instant diversification into equity (stock) and fixed income (bond) market. The following American Funds Capital Income Builder fund is part of World Allocation balanced fund. This World Allocation fund may invest in global stocks and bonds including preferred stock, convertible, emerging markets, high yield, corporate bond, etc.

American Funds Capital Income Builder A (Ticker: CAIBX)

AF Capital Income Builder A

This American Funds Capital Income Builder fund’s objective is to provide a level of current income and a growing stream of income over the years. The fund’s secondary objective is to achieve capital growth. This American Funds fund invests most of its assets (>90%) in income-producing securities, including common stocks and bonds (with <50% of assets in stocks). CAIBX may also invest in foreign companies stocks.

CAIBX Fund Details

• Fund Inception Date: 07/30/1987
• Ticker Symbol: CAIBX (Class A)
• CUSIP: 140193 10 3
• Beta (3yr): 1.08
• Yield: 3.37%
• Expense Fee: 0.60%
• Total Assets: $104 Billion
• Minimum to Invest: $250
• Number of Years Up: 20 years
• Number of Years Down: 3 years
• Sales Load: 5.75% (Front End)

updated May 2017

Mark R. MacDonald is the fund’s manager since 2000. MacDonald is Senior Vice President of Fixed Income, Capital Research and Management Co. As one the most popular mutual fund, this balanced fund currently has assets of $71.04 Billion.  It also has a management fee of 0.24% and a sales-load fee of 5.75%. The dividend yield of this fund is 4.45%. The last dividend distributed in September 2011 with $0.46. The fund’s annual turnover is 42.00% as of September 2011. The expense ratio is 0.62% per year.

Morningstar has rated this fund with 4 stars rating. This CAIBX fund has 20 years of positive return since its inception; the best performance was in 1997 with 23.31% of total return. Based on load adjusted return, the fund has returned -5.70% over the past 1 year, 0.81% over the past 3 year, and 5.84% over the past decade.

• Year 2017: 5.51% (YTD)
• Year 2016: 6.90%
• Year 2015: -2.92%
• Year 2014: 6.61%
• Year 2013: 14.90%

The minimum initial investment for this AF fund is $250 for either brokerage or IRA account. You will need $50 for subsequent investment. It can be purchased from 73 brokerages include JPMorgan, Merrill Lynch, TD Ameritrade Inc, E Trade Financial, Schwab Retail, Edward Jones, etc.

The other classes of CAIBX are Class B (Ticker: CIBBX), Class C (Ticker: CIBCX), Class F-1 (Ticker: CIBFX),  Class F-2 (Ticker: CAIFX), Class 529-A (CIRAX), Class 529-B (CIRBX), Class 529-C (CIRCX), Class 529-E (CIREX), and Class 529-F (CIRFX).

As of October 2011, the fund’s asset mix is as follows:

• Non US Equities (35.9%)
• US Equities (32.8%)
• US Bonds (20.8%)
• Non-US Bonds (3.7%)

For the bond portion, this fund’s fixed income has an average life of 6.5 years and an average duration of 4.1 years.

The top 10 largest sectors include Diversified telecommunication services, Tobacco, Oil | gas & consumable fuels, Pharmaceuticals, Electric utilities, Multi-utilities, Real Estate Investment Trusts (REITs), Commercial banks, Food products, and Beverages. The 10 largest equity holdings of CAIBX are Philip Morris International, AT&T, Altria, Royal Dutch Shell, Novartis, Conoco Phillips, Verizon, Kraft Foods, Scottish and Southern Energy, and Abbott Laboratories.

The top 5 geographic breakdown are United States, Europe, Asia & Pacific Basin, Other (Canada & Latin America), and Cash & Equivalent.

Per fund’s prospectus, the investment risks are market risk, investing style risk, bonds risks, foreign investment risk, management style risk, etc.

Disclosure: No Position

Interesting hybrid mutual funds:

• Calamos Global Growth & Income (CVLOX)
• Vanguard Wellesley Income fund VWINX
• Top Performer World Allocation Balanced Mutual Funds May 2011