Capital Group Companies

Last updated

Capital Group Companies, Inc.
Company type Private
Industry Financial services
Founded1931;93 years ago (1931)
Founder Jonathan 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
RevenueIncrease2.svg $7.6 billion (2020) [1]
AUM Increase2.svg $2.2 trillion (August 2021) [2]
OwnerPartners
Number of employees
7,500 (2020) [3]
Subsidiaries American Funds, Capital Research and Management Company, Capital Bank and Trust Company, FSB
Website capitalgroup.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.

Contents

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

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

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

The chief executive is Mike Gitlin as of 2024.

Strategies

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

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

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

Offices

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

Related Research Articles

A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to improve investment performance and insulate returns from market risk. Among these portfolio techniques are short selling and the use of leverage and derivative instruments. In the United States, financial regulations require that hedge funds be marketed only to institutional investors and high-net-worth individuals.

A mutual fund is an investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in Europe, and the open-ended investment company (OEIC) in the UK.

<span class="mw-page-title-main">Fidelity Investments</span> American multinational financial services corporation

Fidelity Investments, formerly known as Fidelity Management & Research (FMR), is an American multinational financial services corporation based in Boston, Massachusetts. Established in 1946, the company is one of the largest asset managers in the world, with $5.4 trillion in assets under management, and $14.1 trillion in assets under administration, as of June 2024, Fidelity Investments operates a brokerage firm, manages a large family of mutual funds, provides fund distribution and investment advice, retirement services, index funds, wealth management, securities execution and clearance, asset custody, and life insurance.

An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or commodities such as gold bars. Many ETFs provide some level of diversification compared to owning an individual stock.

The Vanguard Group, Inc. is an American registered investment advisor founded on May 1, 1975, and based in Malvern, Pennsylvania, with about $9.3 trillion in global assets under management as of May 2024. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock's iShares. In addition to mutual funds and ETFs, Vanguard offers brokerage services, educational account services, financial planning, asset management, and trust services. Several mutual funds managed by Vanguard are ranked at the top of the list of US mutual funds by assets under management. Along with BlackRock and State Street, Vanguard is considered to be one of the Big Three index fund managers that play a dominant role in corporate America.

Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts/mandates or via collective investment schemes like mutual funds, exchange-traded funds, or Real estate investment trusts.

<span class="mw-page-title-main">PIMCO</span> US global investment management firm

Pacific Investment Management Company LLC is an American investment management firm focusing on active fixed income management worldwide. PIMCO manages investments in many asset classes such as fixed income, equities and other financial assets across public and private markets. PIMCO is one of the largest investment managers, actively managing more than $2 trillion in assets for central banks, sovereign wealth funds, pension funds, corporations, foundations and endowments, and individual investors around the world. According to the Sovereign Wealth Fund Institute, PIMCO is the 6th-largest asset manager in the world by managed AUM.

<span class="mw-page-title-main">BlackRock</span> American investment company

BlackRock, Inc. is an American multinational investment company. Founded in 1988, initially as an enterprise risk management and fixed income institutional asset manager, BlackRock is the world's largest asset manager, with US$11.5 trillion in assets under management as of December 31, 2023. Headquartered in New York City, BlackRock has 70 offices in 30 countries, and clients in 100 countries.

Wilshire Associates, Inc. is an American independent investment management firm that offers consulting services and analytical products and manages fund of funds investment vehicles for a global client base. Wilshire manages capital for more than 600 institutional investors globally representing more than $8 trillion of capital. Wilshire is also known for the creation of the Wilshire 5000 stock index in 1974 and more recently the Wilshire 4500 stock index.

In finance, assets under management (AUM), sometimes called fund under management, measures the total market value of all the financial assets which an individual or financial institution—such as a mutual fund, venture capital firm, or depository institution—or a decentralized network protocol controls, typically on behalf of a client. Funds may be managed for clients, platform users, or solely for themselves, such as in the case of a financial institution which has mutual funds or holds its own venture capital. The definition and formula for calculating AUM may differ from one entity to another.

<span class="mw-page-title-main">Wellington Management Company</span> American investment management firm

Wellington Management Company is a private, independent investment management firm with client assets under management totaling over US$1 trillion based in Boston, Massachusetts, United States.

<span class="mw-page-title-main">T. Rowe Price</span> American publicly owned investment firm

T. Rowe Price Group, Inc. is an American publicly owned global investment management firm that offers funds, subadvisory services, separate account management, and retirement plans and services for individuals, institutions, and financial intermediaries. The firm has assets under management of more than $1.51 trillion and annual revenues of $6.48 billion as of 2023, placing it 537 on the Fortune 1000 list of the largest U.S. companies. Headquartered at 100 East Pratt Street in Baltimore, Maryland, it has 7,868 employees across 17 international offices serving clients in 55 countries.

<span class="mw-page-title-main">Socially responsible investing</span> Any investment strategy combining both financial performance and social/ethical impact.

Socially responsible investing (SRI) is any investment strategy which seeks to consider financial return alongside ethical, social or environmental goals. The areas of concern recognized by SRI practitioners are often linked to environmental, social and governance (ESG) topics. Impact investing can be considered a subset of SRI that is generally more proactive and focused on the conscious creation of social or environmental impact through investment. Eco-investing is SRI with a focus on environmentalism.

Jonathan Bell Lovelace (1895–1979) was an American businessman, football coach, and investor. He was the founder of Capital Group Companies.

In the investment management industry, a separately managed account (SMA) is any of several different types of investment accounts. For example, an SMA may be an individual managed investment account; these are often offered by a brokerage firm through one of their brokers or financial consultants and managed by independent investment management firms ; they have varying fee structures. These particular types of SMAs may be called "wrap fee" or "dual contract" accounts, depending on their structure. There is no official designation for the SMA, but there are common characteristics that are represented in many types of SMA programs. These characteristics include an open structure or flexible investment security choices; multiple money managers; and a customized investment portfolio formulated for a client's specific investment objectives or desired restrictions.

<span class="mw-page-title-main">PGIM</span> American Investment Management firm

PGIM, Inc. (PGIM), formerly known as Prudential Investment Management, functions as the asset management arm of Prudential Financial, an American life insurance company.

<span class="mw-page-title-main">Investment fund</span> Way of investing money alongside other investors

An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages include an ability to:

<span class="mw-page-title-main">CI Financial</span> Largest investment management firm by assets under management in Canada

CI Financial is a Canadian investment management company based in Toronto, Ontario. It offers investment management and wealth management services targeted to high net worth retail investors, as well as brokerage and trading services to portfolio managers and institutional investors.

<span class="mw-page-title-main">PRIMECAP</span> Asset management firm based in Pasadena, California

PRIMECAP Management Company (Primecap) is an American investment management firm based in Pasadena, California. The firm is known for managing US-focused equity portfolios for The Vanguard Group (Vanguard). In 2004, it launched its own mutual funds, the Odyssey Funds. In addition, it also handles separately managed accounts for institutional investors.

References

  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
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.