In a press conference today, Capital Group, a mutual fund and portfolio management company, announced its entrance into the world of ETFs with six offerings that will be going live in the spring of 2022.
Capital Group has filed with the SEC for six fully transparent ETFs that are set to launch late in the first quarter of 2022. The funds will not be clones of the mutual funds currently offered by the firm, and they currently have no plans to convert any of their American Funds into ETFs.
“We’ve been watching the rise of ETFs and the evolution of regulatory rules. It became apparent we could thoughtfully deliver investment services in ETFs that are fully transparent and in a way that other large money managers are not doing,” said Chairman and CEO Tim Armour in the press conference.
The Capital Group Growth ETF (CGGR) will invest primarily in common stocks and companies that offer high growth opportunity for capital. It will include U.S. and international stocks, with up to 25% of its assets invested in securities outside of the U.S.
The Capital Group Core Equity ETF (CGUS) will seek capital appreciation and income by investing mainly in companies that will offer appreciation and/or dividends within equity securities. The fund will be able to invest up to 15% of its assets in securities outside of the U.S.
The Capital Group Dividend Value ETF (CGDV) will seek capital appreciation and income by investing in large cap companies that pay dividends greater than the average yield on U.S. stocks, using the S&P 500 as the basis. 90% of the assets will be invested in equity securities, with 10% able to be invested in large cap companies outside of the U.S.
The Capital Group International Focus Equity ETF (CGXU) will invest in growth companies outside of the U.S., with a minimum spread of three countries, including those in emerging markets.
The Capital Group Global Growth Equity ETF (CGGO) will invest in growth companies outside of the U.S. as well as in the U.S., including those in emerging markets. It also will invest in a minimum of three countries, but with the caveat that at least 40% of the fund is allocated outside of the U.S., except in unfavorable market conditions, in which case it will invest 30%.
The Capital Group Core Plus Income ETF (CGCP) seeks to invest in bonds and debt securities, including derivatives. This can include corporate bonds, debt, mortgage, and other asset-backed securities that are issued by government-sponsored parties, but are not backed by the credit of the U.S. government.
All of the funds will be transparent and under the supervision of multiple portfolio managers, who will each oversee a portion of their respective funds. The full line will be specific to the U.S., but Capital Group intends to release ETFs to a global investing audience over time.
“We are all in on this. As you’ve seen, we are launching 6 ETFs across equities and fixed income. We also have staffed up a new capital markets function, invested heavily in technology and talent and put the might of Capital Group behind this effort as we are building and scaling for the future,” said Holly Framsted, head of ETFs at Capital Group.
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