Capital Group Companies Explained
Capital Group Companies, Inc. |
Type: | Private |
Industry: | Financial services |
Founder: | Jonathan Bell Lovelace |
Location City: | Los Angeles, California |
Location Country: | United States |
Area Served: | Worldwide |
Key People: | Mike Gitlin (CEO) |
Products: | Sub-advisory services to mutual funds and other pooled investment vehicles |
Revenue: | $7.6 billion (2020) [1] |
Aum: | $2.2 trillion (August 2021)[2] |
Subsid: | American Funds, Capital Research and Management Company, Capital Bank and Trust Company, FSB |
Owner: | Partners |
Num Employees: | 7,500 (2020) [3] |
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
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]
Former British PM Theresa May's husband Philip 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 Tim Armour,[22] who took over in 2015 after the death of James Rothenberg.[23]
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.[24] 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.[25] [26]
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.[27] Growth Fund of America, founded in 1973, was the largest actively-managed fund as of 2020 with around $150 billion.[28]
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.[29]
Ownership
As of 2019, the company is owned by 450 partners.[30]
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.[31] Its Asia offices include Beijing, Hong Kong, Mumbai, Singapore and Tokyo. Capital Group also has a growing presence in Sydney.[32]
See also
Notes and References
- Web site: Capital Group Companies . . April 7, 2021 . December 25, 2022 . https://web.archive.org/web/20221225112959/https://www.forbes.com/companies/capital-group-companies/?sh=415ce7336c14 . live .
- Web site: Capital Group Names Rob Hardy Corporate Governance Director Capital Group . March 9, 2021 . April 19, 2021 . https://web.archive.org/web/20210419034632/https://www.capitalgroup.com/about-us/news-room/capital-group-names-rob-hardy-corporate-governance-director.html . live .
- Web site: Working At Capital Group Companies: Employee Reviews and Culture . May 18, 2020 . April 7, 2021 . August 20, 2024 . https://web.archive.org/web/20240820161209/https://www.zippia.com/capital-group-companies-careers-52674/ . live .
- Web site: Thune. Kent. American Funds Review — Everything You Need to Know Before Investing. June 16, 2021. The Balance. en. July 3, 2022. https://web.archive.org/web/20220703050820/https://www.thebalance.com/american-funds-review-4582658. live.
- Web site: Bloomberg - American Funds. June 16, 2021. www.bloomberg.com. November 21, 2023. https://web.archive.org/web/20231121054933/https://www.bloomberg.com/profile/company/0220183D:US. live.
- Web site: American Funds Distributors - DNB. live. https://web.archive.org/web/20210624195249/https://www.dnb.com/business-directory/company-profiles.american_funds_distributors_inc.7039d6c5c0181d788f1bf5a503ead4cf.html . June 24, 2021 .
- Web site: November 6, 2009. Why we should remember Jon Lovelace. June 16, 2021. NH Business Review. en-US.
- News: Carter. Adrienne. November 19, 2011. Jon B. Lovelace, Mutual Fund Industry Leader, Dies at 84. en-US. The New York Times. June 16, 2021. 0362-4331. May 24, 2018. https://web.archive.org/web/20180524112425/https://www.nytimes.com/2011/11/19/business/mutfund/jon-b-lovelace-mutual-fund-industry-leader-dies-at-84.html?_r=0. live.
- Web site: Capital Group Retains JBL's Initial Approach Los Angeles Business Journal. June 16, 2021. labusinessjournal.com. March 18, 2012. June 24, 2021. https://web.archive.org/web/20210624195255/https://labusinessjournal.com/news/2012/mar/19/capital-group-retains-jbls-initial-approach/. live.
- (May 4, 1927) New Investment Company. New York Times
- Ellis, Charles D. (2004). Wall Street People: True Stories of Today’s Masters and Moguls. New York: John Wiley & Sons. Pg. 193
- News: Capital Group mutual funds in 1950s. live. June 16, 2021. Bloomberg.com. May 14, 2019 . https://web.archive.org/web/20190612133128/https://www.bloomberg.com/news/features/2019-05-14/the-1-9-trillion-fund-giant-with-a-crazy-idea-about-investing . June 12, 2019 .
- Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg. 196
- Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg 196
- Willis, Clint (September 1997). The Giant Nobody Knows. Mutual Funds Link unavailable
- Petruno, Tom (November 26, 1990). Capital Performance. The Los Angeles Times
- Greene, Andrew (January 10, 2003). Fund Titan: Jon B. Lovelace Jr., Empire Builder. Ignites
- Web site: Philip May: the reserved City fixture and husband happy to take a back seat. Goodley. Simon. July 12, 2016. The Guardian. live. https://web.archive.org/web/20160712212610/https://www.theguardian.com/business/2016/jul/12/philip-may-theresa-may-quiet-husband-city-experience. July 12, 2016.
- News: Capital Group Halves Interest In BAE Systems To 5% (ALLISS) . Morningstar . May 29, 2019 . August 5, 2019 . August 5, 2019 . https://web.archive.org/web/20190805115936/https://www.morningstar.co.uk/uk/news/AN_1559128800034401100/capital-group-halves-interest-in-bae-systems-to-5-(alliss).aspx . dead .
- Web site: BTI Top Institutional Holders . Yahoo! Finance . April 24, 2020 . June 18, 2020 . https://web.archive.org/web/20200618074610/https://finance.yahoo.com/quote/BTI/holders/ . live .
- Web site: ASML shares Supplying the semiconductor industry . March 5, 2021 . August 3, 2023 . https://web.archive.org/web/20230803235027/https://www.asml.com/en/investors/shares . live .
- Web site: Meet the Active Manager That's Beating the Odds. Kapadia. Reshma. www.barrons.com. en-US. January 6, 2020. September 25, 2020. https://web.archive.org/web/20200925231729/https://www.barrons.com/articles/meet-the-active-manager-thats-beating-the-odds-1539102369. live.
- Web site: The $1.9T Fund Giant With a Crazy Idea About Investing. www.thewealthadvisor.com. en. January 6, 2020. April 19, 2021. https://web.archive.org/web/20210419183641/https://www.thewealthadvisor.com/article/19t-fund-giant-crazy-idea-about-investing. live.
- Web site: The $1.9T Fund Giant With a Crazy Idea About Investing. www.thewealthadvisor.com. en. January 6, 2020. April 19, 2021. https://web.archive.org/web/20210419183641/https://www.thewealthadvisor.com/article/19t-fund-giant-crazy-idea-about-investing. live.
- Web site: The $1.9T Fund Giant With a Crazy Idea About Investing. January 30, 2021. www.thewealthadvisor.com. en. April 19, 2021. https://web.archive.org/web/20210419183641/https://www.thewealthadvisor.com/article/19t-fund-giant-crazy-idea-about-investing. live.
- Web site: Capital Group Will Restructure Based On Investment Objectives. www.fa-mag.com. March 27, 2020.
- Web site: Capital Group, bastion of active management, rebounds to $1.9 trillion. May 14, 2019. InvestmentNews. en-US. March 27, 2020. March 27, 2020. https://web.archive.org/web/20200327062307/https://www.investmentnews.com/capital-group-bastion-of-active-management-rebounds-to-1-9-trillion-79537. live.
- Web site: How the Mighty Have Fallen. Morningstar, Inc.. March 18, 2020. en. March 27, 2020. March 27, 2020. https://web.archive.org/web/20200327075449/https://www.morningstar.com/articles/972822/how-the-mighty-have-fallen. live.
- Kyle Woodley (01 March 2022) Capital Group's New ETFs: A Suite of Portfolio Building Blocks, Kiplinger; accessed 10 June 2023.
- Web site: The $1.9T Fund Giant With a Crazy Idea About Investing. www.thewealthadvisor.com. en. January 6, 2020. April 19, 2021. https://web.archive.org/web/20210419183641/https://www.thewealthadvisor.com/article/19t-fund-giant-crazy-idea-about-investing. live.
- Samuel, Juliet (October 16, 2014). Capital Group turns to wealth for International Expansion. Wall Street Journal
- Smith, Mark (December 1, 2014). Capital Group expands retail sales team. Financial Standard