Q4 2025 Fund Commentary

Commentary and opinions are provided by Capital Group Companies Inc.

Market commentary

Global equities rose over the fourth quarter of 2025 amid supportive fiscal and monetary policies. U.S. stocks rose despite volatility tied to softer consumer sentiment and mixed labour data, with sector leadership in health care and communication services.

European equities rose because of solid corporate earnings and signs of improving economic growth. Canadian equities rose because of strength in the materials, financials and consumer discretionary sectors. Japanese equities benefited from a weaker yen and corporate reforms. Emerging markets rose overall, led by the information technology and materials sectors in South Korea, Taiwan and Chile. Indian equities advanced as the country’s central bank cut policy interest rates, while China declined amid slowing momentum. The Canadian dollar appreciated against major reserve currencies.

Performance

The Fund’s relative exposures to SK Hynix Inc. and Taiwan Semiconductor Manufacturing Co. Ltd. contributed to performance. Both companies posted stronger-than-expected quarterly results because of semiconductor demand. Relative exposures to Eli Lilly and Co. and Vertex Pharmaceuticals Inc. contributed to the Fund’s performance as the companies benefited from their drug franchises. Other contributors to performance included holdings in Banco Bilbao Vizcaya Argentaria SA, General Motors Co. and Bombardier Inc.

Relative exposures to Strategy Inc., BAE Systems PLC and Fiserv Inc. detracted from the Fund’s performance. Strategy was affected by the falling price of bitcoin, while BAE Systems was affected by profit-taking at year-end. Fiserv’s shares declined after the company missed its estimates and lowered its earnings forecast. Other detractors from performance were holdings in Royal Caribbean Cruises Ltd., Flutter Entertainment PLC and MercadoLibre Inc. and the Fund’s relative exposure to Alphabet Inc.

At a sector level, stock selection in the information technology sector contributed to the Fund’s performance, as did overweight exposures to select semiconductor companies. Selection in U.S. health care contributed to performance, supported by holdings in the innovative therapeutics sub-sector. Stock selection in the financials sector detracted from the Fund’s performance.

At a regional level, exposures to South Korea, Taiwan and Canada contributed to the Fund’s performance. Exposures to and selection in the U.S., the U.K. and Sweden detracted from performance. Holdings in European defence companies detracted from performance because of profit-taking.

Portfolio activity

The sub-advisor added to the Fund holdings in Reddit Inc., AGCO Corp., Vistra Corp., Infineon Technologies AG and Texas Roadhouse Inc. Holdings in Linde PLC, Honeywell International Inc., MongoDB Inc., Cheniere Energy Inc. and Five Below Inc. were sold.

Outlook

The Fund is focused on long-term growth of capital. According to the sub-advisor, market conditions may continue to be influenced by monetary policy paths, corporate earnings and geopolitical developments. Against this backdrop, the sub-advisor will likely maintain the Fund’s diversified exposure across regions and sectors while emphasizing companies with competitive advantages and strong balance sheets.