SEC Company Response from AMERICAN FUNDS INSURANCE SERIES (CIK 0000729528) — Apr 22, 2022
AMERICAN FUNDS INSURANCE SERIES (CIK 0000729528)
Date: April 22, 2022 · CIK: 0000729528 · Accession: 0000051931-22-000349
AI Filing Summary & Sentiment
File numbers found in text: 811-03857
Letter
Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549-3628 Re: American Funds Insurance Series (the “Registrant” or the “Series”) File Nos. 002-86838 and 811-03857
Dear Mr. Cowan:
This letter is in response to the comments you provided on March 18, 2022 to the Registrant’s Post-Effective Amendment No. 100 to the Registration Statement under the Securities Act of 1933 (the “1933 Act”) and Amendment No. 100 to the Registration Statement under the Investment Company Act of 1940 (the “1940 Act”), which amendment reflected, among other things, certain revisions to the fund’s investment strategies and the addition of a management fee waiver. We appreciate your prompt response to the filing.
Our responses to your comments are set forth below. We will incorporate any changes to the Registration Statement in a subsequent filing pursuant to Rule 485(b) under the 1933 Act to be immediately effective on May 1, 2022 (the “Amendment”). We understand that, unless otherwise stated, when a comment is made with respect to disclosure in one portion of the Registration Statement, that comment is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Accordingly, where applicable, responses to your comments below with respect to any individual class of shares apply equally to each of the Registrant’s other classes of shares with similar disclosure.
Summary Prospectus
A. American Funds Global Balanced Fund
In the section captioned “Principal investment strategies,” please supplementally confirm whether the fund has any investment criteria related to maturity and duration of bonds and other debt securities, and if so, please consider including appropriate disclosure.
Response: As disclosed in the section captioned “Investment objectives, strategies and risks” of the fund’s statutory prospectus, American Funds Global Balanced Fund may invest in bonds and other debt securities of any maturity or duration. The ability to invest in bonds and other debt securities of any maturity or duration is not a principal investment strategy of the fund. We consider principal investment strategies to be affirmative policies or limitations that describe how the fund principally intends to achieve its investment objective. The ability to invest in bonds and other debt securities of any maturity or duration is not an affirmative strategy that describes how the fund will principally seek to obtain its investment objective. As such, consistent with the layered disclosure approach, we believe the statement regarding maturity and duration is appropriately placed in the fund’s statutory prospectus in response to Item 9 of Form N-1A.
In the section captioned “Principal investment strategies,” the fund states that it “will allocate its assets among various countries, including the United States (but in no fewer than three countries). Under normal market conditions, the fund will invest at least 40% of its net assets in issuers outside the United States, unless market conditions are not deemed favorable by the fund’s investment adviser, in which case the fund would invest at least 30% of its net assets in issuers outside the United States.” Please describe the specific criteria the fund uses to determine that an investment is economically tied to countries outside the United States.
Response: We respectfully refer the Staff to the Registrant’s disclosure in its statement of additional information, which states that “[i]n determining the domicile of an issuer, the fund's investment adviser will generally look to the domicile determination of a leading provider of global indexes, such as Morgan Stanley Capital International. However, the adviser in its discretion also may take into account such factors as where the issuer's securities are listed and where the issuer is legally organized, maintains principal corporate offices, conducts its principal operations, generates revenues and/or has credit risk exposure.” The disclosure makes clear the various factors that are considered by the investment adviser in making its determination of the domicile of an issuer. No single factor is determinative and some or all of the factors listed may potentially factor into the investment adviser’s determination. We believe the current disclosure is sufficiently clear as to how an issuer’s domicile is determined, and do not believe any additional disclosure is required to address this comment at this time.
In the section captioned “Principal risks,” please consider describing the risks associated with sovereign debt.
Response: We believe that the fund’s current risk disclosure, including the risks disclosed under the captions “Principal risks — Investing outside the United States” and “— Investing in debt instruments,” adequately describes the risks associated with investing in sovereign debt. Accordingly, we believe no further risk disclosure is presently required in response to this comment.
In the section captioned “Principal risks,” please consider describing the risks associated with investing in medium and large-capitalization issuers.
Response: We believe that the fund’s current risk disclosure, including the risks disclosed under the captions “Principal risks — Market conditions” and “— Issuer risks,” adequately describes the risks associated with investing in medium and large-capitalization issuers. Accordingly, we believe no further risk disclosure is presently required in response to this comment.
Please confirm supplementally whether American Funds Global Balanced Fund invests or intends to invest in preferred stocks, contingent preferred stocks and convertible bonds as a principal investment strategy, and if so, please consider including appropriate risk disclosure.
Response: We have updated the disclosure to address this comment as set forth below.
Investing in growth-oriented stocks — Growth-oriented common stocks and other equity-type securities (such as preferred stocks, convertible preferred stocks and convertible bonds) may involve larger price swings and greater potential for loss than other types of investments. These risks may be even greater in the case of smaller capitalization stocks.
Please confirm supplementally whether American Funds Global Balanced Fund invests or intends to invest in contingent convertible securities, either as a principal investment strategy or as an additional strategy. If American Funds Global Balanced Fund invests in contingent convertible securities, please state supplementally the amount the fund currently invests in such securities.
Response: American Funds Global Balanced Fund may invest in contingent convertible securities as a non-principal investment strategy; however, as of the date hereof, American Funds Global Balanced Fund has no investments in contingent convertible securities. Nevertheless, the Registrant has included disclosure regarding contingent convertible securities and the risks thereof in its statement of additional information under “Description of certain securities, investment techniques and risks – Hybrid securities.”
In the section captioned “Principal risks,” please describe the risks associated with Brexit and investing in China, if applicable.
Response: American Funds Global Balanced Fund is actively managed and relies on the professional judgement of its investment adviser to make decisions about the fund’s portfolio investments. It is not an investment strategy of the fund to invest in securities of issuers in any particular market. As such, we disclose risks associated with investing outside of the United States, including in emerging markets. Accordingly, at this time, we respectfully decline to specifically disclose Brexit risks associated with investing in the United Kingdom and risks associated with investing in China. However, we note supplementally that, because the investment portfolio of the fund is actively managed, and because, from time to time, the fund may have significant exposure to a particular country, region, industry or sector, the fund’s prospectus includes disclosure regarding the risk of such exposure. In addition, with respect to the fund’s investments in China, we note that the Registrant has included disclosure regarding the risks associated with investing through Stock Connect in its statement of additional information under “Description of certain securities, investment techniques and risks — Investing through Stock Connect.”
In the section captioned “Principal risks,” please consider addressing risks related to market manipulation concerns. See ADI 2020-11.
Response: With respect to market manipulation concerns, we believe the Registrant’s current disclosure is sufficient. The disclosure notes that “emerging market countries tend to have less developed political, economic and legal systems and accounting and auditing practices and standards than those in developed countries” and “[a]ccordingly, the governments of these countries may be less stable and more likely to intervene in the market economy.” The disclosure also notes that the “[s]ecurities markets in these countries can also be relatively small and have substantially lower trading volumes” and “[a]s a result, securities issued in these countries may be more volatile and less liquid.” We believe the Registrant’s current disclosure is sufficient to inform investors of the risk that stock prices in emerging markets may be more susceptible to manipulation due to less developed systems, practices and standards and fewer circulating shares as compared to those in developed countries.
We note that the fund does not include call risk. Please add this risk to the disclosure or explain why the fund believes this risk should not be included as a principal risk.
Response: The fund expects to invest in debt instruments as a principal investment strategy, and we have included disclosure to this effect under “Investment strategies and risks.” Call risk is one of a number of risks related to investing in debt instruments. However, based on its principal investment strategies, the fund does not except call risk to be a principal risk. Accordingly, we have not included call risk as a principal risk under “Investment strategies and risks”. However, because the fund may be exposed to these risks through the nature of its investments, additional details about these risks are described in the “Investing in debt instruments” and “Investing in mortgage related and other asset backed securities” sections.
In the section captioned “Principal risks,” please revise the disclosure regarding “other income-bearing assets” to include the additional types of assets listed in the statutory prospectus.
Response: We have updated the disclosure to address this comment as set forth below.
Investing in mortgage-related and other asset-backed securities — Mortgage-related securities, such as mortgage-backed securities, and other asset-backed securities, include debt obligations that represent interests in pools of mortgages or other income-bearing assets, such as residential mortgage loans, home equity loans, mortgages on commercial buildings, consumer loans or receivables and equipment leases. While such securities are subject to the risks associated with investments in debt instruments generally (for example, credit, extension and interest rate risks), they are also subject to other and different risks…
In the section captioned “Principal risks,” please revise the disclosure to include the additional risks associated with the assets underlying asset-backed securities.
Response: To the extent investing in asset-backed securities is a principal investment strategy of the fund, we discuss the risks associated with underlying securities in the principal risk section. See “Investing in mortgage-related and other asset-backed securities.” Consistent with the layered disclosure approach, risks associated with underlying securities for other asset-backed securities are appropriately described in the fund’s statement of additional information. See “Pass-through securities.”
In the section captioned “Investment results,” please clarify that “other applicable measures of market results” refers to the blended index.
Response: We have updated the disclosure to address this comment as set forth below.
The following bar chart shows how the investment results of the Class 1 shares of the fund have varied from year to year, and the following table shows how the fund’s average annual total returns for various periods compare with a broad measure of securities market results and other applicable measures of market results, such as the 60%/40% MSCI All Country World Index/Bloomberg Global Aggregate Index.
In the section captioned “Investment results,” please remove additional disclosure regarding blended indexes not required or permitted in the introduction to the section.
Response: We have updated the disclosure to address this comment as set forth below.
The fund has selected the 60%/40% MSCI All Country World Index/Bloomberg Global Aggregate Index to replaceblends the MSCI All Country World Index as its broad-based securities market index. The fund's investment adviser believes that the 60%/40% MSCI All Country World Index/Bloomberg Global Aggregate Index better reflects the market sectors and securities in, which the fund primarily invests and the investment strategies employed by the adviser in seeking to achieve the fund's investment objective. MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market results in the measures global developed and emerging equity markets, consisting of more than 40 developed and emerging market country indexes. Results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter. with the Bloomberg Global Aggregate Index, which measures represents the global investment-grade fixed income markets bonds (rated BBB-/Baa3 and above), by weighting their total returns at 60% and 40% respectively.
Response: We note the additional risks disclosure states that the fund may engage in active and frequent trading of portfolio securities. If the changes in the fund’s principal investment strategies will result in a significant variation in the fund’s portfolio turnover rate, please move the disclosure in this section to the principal risks section or explain why it should not be relocated. [Item 16(e).]
Response: We hereby confirm that the changes in the fund’s principal investment strategies will not result in a significant variation in the fund’s portfolio turnover rate. Furthermore, frequent and active trading is not a principal investment strategy of the fund. However, market conditions may dictate that the fund engage in such trading from time to time, particularly given the nature of the fund’s investments. Accordingly, we included risk disclosure to notify investors that the fund may engage in frequent and active trading and to describe the risks associated with portfolio turnover. Because frequent and active trading is not a principal investment strategy, the portfolio turnover risk disclosure is included in the fund’s statutory prospectus and labeled as an “additional risk,” not a “principal risk.” We believe the placement of the current disclosure is appropriate and respectfully decline to revise the disclosure as proposed.
Statutory Prospectus
According to the disclos
Show Raw Text
CORRESP
1
filename1.htm
Joshua R.
Diggs
Counsel
Capital Research
and Management Company
333 South Hope
Street
Los Angeles,
California 90071-1406
(213) 615-0047
Tel
(213) 486-9611
Fax
capitalgroup.com
April 22, 2022
Mark A. Cowan
Senior Counsel
U.S. Securities
and Exchange Commission
Division of Investment
Management
Disclosure Review
Office
100 F Street, N.E.
Washington, D.C.
20549-3628
Re: American
Funds Insurance Series (the “Registrant” or the “Series”)
File
Nos. 002-86838 and 811-03857
Dear Mr. Cowan:
This
letter is in response to the comments you provided on March 18, 2022 to the Registrant’s Post-Effective Amendment No. 100 to the
Registration Statement under the Securities Act of 1933 (the “1933 Act”) and Amendment No. 100 to the Registration
Statement under the Investment Company Act of 1940 (the “1940 Act”), which amendment reflected, among other things,
certain revisions to the fund’s investment strategies and the addition of a management fee waiver. We appreciate your prompt response
to the filing.
Our
responses to your comments are set forth below. We will incorporate any changes to the Registration Statement in a subsequent filing
pursuant to Rule 485(b) under the 1933 Act to be immediately effective on May 1, 2022 (the “Amendment”). We understand
that, unless otherwise stated, when a comment is made with respect to disclosure in one portion of the Registration Statement, that comment
is applicable to all similar disclosure appearing elsewhere in the Registration Statement. Accordingly, where applicable, responses to
your comments below with respect to any individual class of shares apply equally to each of the Registrant’s other classes of shares
with similar disclosure.
Summary
Prospectus
A. American
Funds Global Balanced Fund
In
the section captioned “Principal investment strategies,” please supplementally confirm whether the fund has any investment
criteria related to maturity and duration of bonds and other debt securities, and if so, please consider including appropriate disclosure.
Response:
As disclosed in the section captioned “Investment objectives, strategies and risks” of the fund’s statutory prospectus,
American Funds Global Balanced Fund may invest in bonds and other debt securities of any maturity or duration. The ability to invest
in bonds and other debt securities of any maturity or duration is not a principal investment strategy of the fund. We consider principal
investment strategies to be affirmative policies or limitations that describe how the fund principally intends to achieve its investment
objective. The ability to invest in bonds and other debt securities of any maturity or duration is not an affirmative strategy that describes
how the fund will principally seek to obtain its investment objective. As such, consistent with the layered disclosure approach, we believe
the statement regarding maturity and duration is appropriately placed in the fund’s statutory prospectus in response to Item 9
of Form N-1A.
In
the section captioned “Principal investment strategies,” the fund states that it “will allocate its assets among various
countries, including the United States (but in no fewer than three countries). Under normal market conditions, the fund will invest at
least 40% of its net assets in issuers outside the United States, unless market conditions are not deemed favorable by the fund’s
investment adviser, in which case the fund would invest at least 30% of its net assets in issuers outside the United States.” Please
describe the specific criteria the fund uses to determine that an investment is economically tied to countries outside the United States.
Response:
We respectfully refer the Staff to the Registrant’s disclosure in its statement of additional information, which states that
“[i]n determining the domicile of an issuer, the fund's investment adviser will generally look to the domicile determination of
a leading provider of global indexes, such as Morgan Stanley Capital International. However, the adviser in its discretion also may take
into account such factors as where the issuer's securities are listed and where the issuer is legally organized, maintains principal
corporate offices, conducts its principal operations, generates revenues and/or has credit risk exposure.” The disclosure makes
clear the various factors that are considered by the investment adviser in making its determination of the domicile of an issuer. No
single factor is determinative and some or all of the factors listed may potentially factor into the investment adviser’s determination. We
believe the current disclosure is sufficiently clear as to how an issuer’s domicile is determined, and do not believe any additional
disclosure is required to address this comment at this time.
In
the section captioned “Principal risks,” please consider describing the risks associated with sovereign debt.
Response:
We believe that the fund’s current risk disclosure, including the risks disclosed under the captions “Principal risks
— Investing outside the United States” and “— Investing in debt instruments,” adequately describes the
risks associated with investing in sovereign debt. Accordingly, we believe no further risk disclosure is presently required in response
to this comment.
In
the section captioned “Principal risks,” please consider describing the risks associated with investing in medium and large-capitalization
issuers.
Response:
We believe that the fund’s current risk disclosure, including the risks disclosed under the captions “Principal risks
— Market conditions” and “— Issuer risks,” adequately describes the risks associated with investing in
medium and large-capitalization issuers. Accordingly, we believe no further risk disclosure is presently required in response to this
comment.
Please
confirm supplementally whether American Funds Global Balanced Fund invests or intends to invest in preferred stocks, contingent preferred
stocks and convertible bonds as a principal investment strategy, and if so, please consider including appropriate risk disclosure.
Response:
We have updated the disclosure to address this comment as set forth below.
Investing
in growth-oriented stocks — Growth-oriented common stocks and other equity-type securities (such
as preferred stocks, convertible preferred stocks and convertible bonds) may involve larger price swings and greater
potential for loss than other types of investments. These risks may be even greater in the case of smaller capitalization stocks.
Please
confirm supplementally whether American Funds Global Balanced Fund invests or intends to invest in contingent convertible securities,
either as a principal investment strategy or as an additional strategy. If American Funds Global Balanced Fund invests in contingent
convertible securities, please state supplementally the amount the fund currently invests in such securities.
Response:
American Funds Global Balanced Fund may invest in contingent convertible securities as a non-principal investment strategy; however,
as of the date hereof, American Funds Global Balanced Fund has no investments in contingent convertible securities. Nevertheless, the
Registrant has included disclosure regarding contingent convertible securities and the risks thereof in its statement of additional information
under “Description of certain securities, investment techniques and risks – Hybrid securities.”
In
the section captioned “Principal risks,” please describe the risks associated with Brexit and investing in China, if applicable.
Response:
American Funds Global Balanced Fund is actively managed and relies on the professional judgement of its investment adviser to make
decisions about the fund’s portfolio investments. It is not an investment strategy of the fund to invest in securities of issuers
in any particular market. As such, we disclose risks associated with investing outside of the United States, including in emerging markets.
Accordingly, at this time, we respectfully decline to specifically disclose Brexit risks associated with investing in the United Kingdom
and risks associated with investing in China. However, we note supplementally that, because the investment portfolio of the fund is actively
managed, and because, from time to time, the fund may have significant exposure to a particular country, region, industry or sector,
the fund’s prospectus includes disclosure regarding the risk of such exposure. In addition, with respect to the fund’s investments
in China, we note that the Registrant has included disclosure regarding the risks associated with investing through Stock Connect in
its statement of additional information under “Description of certain securities, investment techniques and risks — Investing
through Stock Connect.”
In
the section captioned “Principal risks,” please consider addressing risks related to market manipulation concerns. See ADI
2020-11.
Response:
With respect to market manipulation concerns, we believe the Registrant’s current disclosure is sufficient. The disclosure
notes that “emerging market countries tend to have less developed political, economic and legal systems and accounting and auditing
practices and standards than those in developed countries” and “[a]ccordingly, the governments of these countries may be
less stable and more likely to intervene in the market economy.” The disclosure also notes that the “[s]ecurities markets
in these countries can also be relatively small and have substantially lower trading volumes” and “[a]s a result, securities
issued in these countries
may be more volatile and less liquid.” We believe the Registrant’s current disclosure is sufficient to inform investors of
the risk that stock prices in emerging markets may be more susceptible to manipulation due to less developed systems, practices and standards
and fewer circulating shares as compared to those in developed countries.
We
note that the fund does not include call risk. Please add this risk to the disclosure or explain why the fund believes this risk should
not be included as a principal risk.
Response:
The fund expects to invest in debt instruments as a principal investment strategy, and we have included disclosure to this effect
under “Investment strategies and risks.” Call risk is one of a number of risks related to investing in debt instruments.
However, based on its principal investment strategies, the fund does not except call risk to be a principal risk. Accordingly, we have
not included call risk as a principal risk under “Investment strategies and risks”. However, because the fund may be exposed
to these risks through the nature of its investments, additional details about these risks are described in the “Investing in debt
instruments” and “Investing in mortgage related and other asset backed securities” sections.
In
the section captioned “Principal risks,” please revise the disclosure regarding “other income-bearing assets”
to include the additional types of assets listed in the statutory prospectus.
Response:
We have updated the disclosure to address this comment as set forth below.
Investing
in mortgage-related and other asset-backed securities — Mortgage-related securities, such as mortgage-backed securities, and other
asset-backed securities, include debt obligations that represent interests in pools of mortgages or other income-bearing assets, such
as residential mortgage loans, home equity loans, mortgages on commercial buildings, consumer
loans or receivables and equipment leases.
While such securities are subject to the risks associated with investments in debt instruments generally (for example, credit, extension
and interest rate risks), they are also subject to other and different risks…
In
the section captioned “Principal risks,” please revise the disclosure to include the additional risks associated with the
assets underlying asset-backed securities.
Response:
To the extent investing in asset-backed securities is a principal investment strategy of the fund, we discuss the risks associated
with underlying securities in the principal risk section. See “Investing in mortgage-related and other asset-backed securities.”
Consistent with the layered disclosure approach, risks associated with underlying securities for other asset-backed securities are appropriately
described in the fund’s statement of additional information. See “Pass-through securities.”
In
the section captioned “Investment results,” please clarify that “other applicable measures of market results”
refers to the blended index.
Response:
We have updated the disclosure to address this comment as set forth below.
The
following bar chart shows how the investment results of the Class 1 shares of the fund have varied from year to year, and the following
table shows how the fund’s average annual total returns for various periods compare with a broad measure of securities market results
and other applicable measures of market results, such as the 60%/40% MSCI All Country World Index/Bloomberg
Global Aggregate Index.
In
the section captioned “Investment results,” please remove additional disclosure regarding blended indexes not required or
permitted in the introduction to the section.
Response:
We have updated the disclosure to address this comment as set forth below.
The
fund has selected the 60%/40% MSCI All Country World Index/Bloomberg Global Aggregate
Index to replaceblends the MSCI All
Country World Index as its broad-based securities market index. The fund's investment adviser believes
that the 60%/40% MSCI All Country World Index/Bloomberg Global Aggregate Index better reflects the market sectors and securities in,
which the fund primarily invests and the investment strategies employed by the adviser
in seeking to achieve the fund's investment objective. MSCI All Country World Index is a free float-adjusted market capitalization weighted
index that is designed to measure equity market results in the measures global
developed and emerging equity markets,
consisting of more than 40 developed and emerging market country indexes. Results reflect dividends
gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter. with
the Bloomberg Global Aggregate Index, which measures represents
the global investment-grade fixed income markets bonds
(rated BBB-/Baa3 and above), by weighting their total returns at 60% and 40% respectively.
Response:
We note the additional risks disclosure states that the fund may engage in active and frequent trading of portfolio securities.
If the changes in the fund’s principal investment strategies will result in a significant variation in the fund’s portfolio
turnover rate, please move the disclosure in this section to the principal risks section or explain why it should not be relocated. [Item
16(e).]
Response:
We hereby confirm that the changes in the fund’s principal investment strategies will not result in a significant variation
in the fund’s portfolio turnover rate. Furthermore, frequent and active trading is not a principal investment strategy of the fund.
However, market conditions may dictate that the fund engage in such trading from time to time, particularly given the nature of the fund’s
investments. Accordingly, we included risk disclosure to notify investors that the fund may engage in frequent and active trading
and to describe the risks associated with portfolio turnover. Because frequent and active trading is not a principal investment strategy,
the portfolio turnover risk disclosure is included in the fund’s statutory prospectus and labeled as an “additional risk,”
not a “principal risk.” We believe the placement of the current disclosure is appropriate and respectfully decline to revise
the disclosure as proposed.
Statutory
Prospectus
According
to the disclos