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Capital Group Companies

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Capital Group Companies, Inc.
Company typePrivate
IndustryFinancial services
Founded1931; 93 years ago (1931)
FounderJonathan Bell Lovelace
Headquarters
Los Angeles, California
,
United States
Area served
Worldwide
Key people
Mike Gitlin (CEO)
ProductsSub-advisory services to mutual funds and other pooled investment vehicles
RevenueIncrease $7.6 billion (2020) [1]
AUMIncrease $2.2 trillion (August 2021)[2]
OwnerPartners
Number of employees
7,500 (2020) [3]
SubsidiariesAmerican Funds, Capital Research and Management Company, Capital Bank and Trust Company, FSB
Websitecapitalgroup.com

Capital Group is an American financial services company. It ranks among the world's oldest and largest investment management organizations, with over $2.6 trillion in assets under management. Founded in Los Angeles, California in 1931, it is privately held and has offices around the globe in the Americas, Asia, Australia and Europe.

Capital offers a range of products focused on active management, including more than 40 mutual funds through its subsidiary, American Funds Distributors, as well as separately managed accounts (or collective investment trusts), private equity, investment services for high net worth investors in the U.S., and a range of other offerings for institutional clients and individual investors globally.[4][5][6]

History

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In 1931, Jonathan Bell Lovelace founded the investment firm, Lovelace, Dennis & Renfrew, which would eventually become Capital Group. Lovelace had previously been a partner in the stock brokerage firm E.E. MacCrone, where he explored the concept of developing an open-end mutual fund. He eventually sold his stake in that company, just before the Wall Street Crash of 1929.[7][8][9]

In 1933, Lovelace's firm took over management of The Investment Company of America, which he had launched at E.E. MacCrone in 1927.[10] For the next 20 years, his firm enjoyed modest success.[11] As mutual funds gained in popularity in the 1950s, Capital's roster of mutual funds grew.[12]

The International Resources Fund, established in 1954,[13] was Capital's first foray into international investing. A year earlier, Lovelace had established an international investment staff at the urging of his son, Jon Lovelace Jr. The establishment of the firm's first overseas research office in Geneva followed in 1962.[14]

In 1958, Jon Lovelace Jr. introduced a new system of managing the firm's mutual funds and accounts. Rather than assign a portfolio to a single manager, he divided each portfolio among several managers. Each manager would share ideas with peers but have total discretion over a section of the portfolio. Known today as The Capital System, it avoids the phenomenon of creating single-manager "stars," who can impact a fund's results should they leave.[15] In the mid-1960s, Capital began to include research analysts in the management of the portfolios, reserving a portion of each to allow analysts to pursue their highest conviction investment ideas.[16]

Capital Group's long-term approach has helped it avoid some of the pitfalls that have plagued other firms. In the late 1990s, the firm was criticized for not offering then-popular tech funds. But when the tech bubble burst, Capital was praised for not jumping on the bandwagon.[17]

Philip May, husband of former British PM Theresa May, has worked as a relationship manager for the Capital Group.[18]

Investments

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As of 2019, Capital Group held 5% of BAE Systems,[19] 9% of British American Tobacco,[20] and 15.28% of ASML Holding.[21]

Leadership

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The chief executive is Mike Gitlin as of 2024.

Strategies

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Funds typically have between three and 13 managers, each managing a portion of the portfolio independently to reduce key person risk and provide diversity of thought. In addition to financial research, the managers may do on-the-ground due diligence, and in 2018 logged 12,400 visits to facilities such as factories.[22] It has three independent divisions focused on equities: Capital World Investors, Capital Research Global Investors and Capital International Investors, as well as one focused on bonds, Capital Fixed Income Investors.[23][24]

Funds

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As of 2019, Capital Group had 36 mutual funds, which operate under their American Funds banner and had about US$1.9 trillion under management.[25] Growth Fund of America, founded in 1973, was the largest actively-managed fund as of 2020 with around $150 billion.[26]

In 2022, Capital Group introduced a suite of six exchange traded funds, five focused on equities and one focused on bonds and other fixed income.[27]

Ownership

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As of 2019, the company is owned by 450 partners.[28]

Offices

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Capital Group employs more than 7,500 associates worldwide. North American locations include Atlanta, Los Angeles, San Antonio, Indianapolis, New York, San Francisco, Toronto and Washington, D.C. As part of expansion plans in Europe, Capital Group established a presence in Frankfurt, Madrid, Milan and Zurich, adding to its offices in Geneva, London and Luxembourg.[29] Its Asia offices include Beijing, Hong Kong, Mumbai, Singapore and Tokyo. Capital Group also has a growing presence in Sydney.[30]

See also

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References

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  1. ^ "Capital Group Companies". Forbes. Archived from the original on December 25, 2022. Retrieved April 7, 2021.
  2. ^ "Capital Group Names Rob Hardy Corporate Governance Director | Capital Group". Archived from the original on April 19, 2021. Retrieved March 9, 2021.
  3. ^ "Working At Capital Group Companies: Employee Reviews and Culture". May 18, 2020. Archived from the original on August 20, 2024. Retrieved April 7, 2021.
  4. ^ Thune, Kent. "American Funds Review — Everything You Need to Know Before Investing". The Balance. Archived from the original on July 3, 2022. Retrieved June 16, 2021.
  5. ^ "Bloomberg - American Funds". www.bloomberg.com. Archived from the original on November 21, 2023. Retrieved June 16, 2021.
  6. ^ "American Funds Distributors - DNB". Archived from the original on June 24, 2021.
  7. ^ "Why we should remember Jon Lovelace". NH Business Review. November 6, 2009. Retrieved June 16, 2021.
  8. ^ Carter, Adrienne (November 19, 2011). "Jon B. Lovelace, Mutual Fund Industry Leader, Dies at 84". The New York Times. ISSN 0362-4331. Archived from the original on May 24, 2018. Retrieved June 16, 2021.
  9. ^ "Capital Group Retains JBL's Initial Approach | Los Angeles Business Journal". labusinessjournal.com. March 18, 2012. Archived from the original on June 24, 2021. Retrieved June 16, 2021.
  10. ^ (May 4, 1927) New Investment Company. New York Times
  11. ^ Ellis, Charles D. (2004). Wall Street People: True Stories of Today’s Masters and Moguls. New York: John Wiley & Sons. Pg. 193
  12. ^ "Capital Group mutual funds in 1950s". Bloomberg.com. May 14, 2019. Archived from the original on June 12, 2019. Retrieved June 16, 2021.
  13. ^ Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg. 196
  14. ^ Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg 196
  15. ^ Willis, Clint (September 1997). The Giant Nobody Knows. Mutual Funds Link unavailable
  16. ^ Petruno, Tom (November 26, 1990). Capital Performance. The Los Angeles Times
  17. ^ Greene, Andrew (January 10, 2003). Fund Titan: Jon B. Lovelace Jr., Empire Builder. Ignites
  18. ^ Goodley, Simon (July 12, 2016). "Philip May: the reserved City fixture and husband happy to take a back seat". The Guardian. Archived from the original on July 12, 2016.
  19. ^ "Capital Group Halves Interest In BAE Systems To 5% (ALLISS)". Morningstar. May 29, 2019. Archived from the original on August 5, 2019. Retrieved August 5, 2019.
  20. ^ "BTI Top Institutional Holders". Yahoo! Finance. Archived from the original on June 18, 2020. Retrieved April 24, 2020.
  21. ^ "ASML shares | Supplying the semiconductor industry". Archived from the original on August 3, 2023. Retrieved March 5, 2021.
  22. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Archived from the original on April 19, 2021. Retrieved January 6, 2020.
  23. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Archived from the original on April 19, 2021. Retrieved January 30, 2021.
  24. ^ "Capital Group Will Restructure Based On Investment Objectives". www.fa-mag.com. Retrieved March 27, 2020.
  25. ^ "Capital Group, bastion of active management, rebounds to $1.9 trillion". InvestmentNews. May 14, 2019. Archived from the original on March 27, 2020. Retrieved March 27, 2020.
  26. ^ "How the Mighty Have Fallen". Morningstar, Inc. March 18, 2020. Archived from the original on March 27, 2020. Retrieved March 27, 2020.
  27. ^ Kyle Woodley (01 March 2022) Capital Group's New ETFs: A Suite of Portfolio Building Blocks Archived June 10, 2023, at the Wayback Machine, Kiplinger; accessed 10 June 2023.
  28. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Archived from the original on April 19, 2021. Retrieved January 6, 2020.
  29. ^ Samuel, Juliet (October 16, 2014). Capital Group turns to wealth for International Expansion. Wall Street Journal
  30. ^ Smith, Mark (December 1, 2014). Capital Group expands retail sales team. Financial Standard
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