One of the world’s oldest and largest active asset managers is building more focused equity and fixed income ETFs in three of the market’s most essential areas. Just today, the firm rolled out the Capital Group High Yield Bond ETF (CGHY), Capital Group U.S. Large Growth ETF (CGGG) and Capital Group U.S. Large Value ETF (CGVV). The launches come amid a growing appetite for active strategies among RIAs. These funds aim to flesh out the firm’s evolving base of model portfolio offerings.
A latecomer to the ETF game, Capital Group has already grown into an active powerhouse. It has the fastest organically growing suite of active ETFs in the business. Having managed mutual funds since 1931, the LA-based company is drawing on nearly a century of investment management expertise and bringing its unique multi-manager approach to the ETF wrapper. Today’s new additions bring the $66 billion ETF manager’s full roster to 25 in the U.S.
More Focused Exposure to Growth & Value
Almost all 25 ETFs have enjoyed positive net inflows year-to-date. But by far the two biggest standouts have been the Capital Group Dividend Value ETF (CGDV) and the Capital Group Growth ETF (CGGR). They’ve seen a haul of $4 billion and $3 billion YTD, respectively.
Drawing on this strong demand for growth and value strategies, CGGG and CGVV aim to provide highly focused exposures to equities within the Russell 1000. Both funds are nondiversified. The idea is to invest with a narrower, more defined lens than their existing domestic growth and value-oriented strategies.
“Clients can access Capital’s best thinking on Russell 1000 Value and Russell 1000 Growth companies that will have the ability to drive capital appreciation over the long term, powered by our distinct approach to active investment management — including our multiple manager system, long-term view and deep, fundamental research,” said Scott Davis, head of ETFs at Capital Group
He added that all three funds aim to serve as core building blocks in portfolios.
“Given their focused value and growth approaches, CGVV and CGGG can be used by advisors and asset allocators constructing model portfolios utilizing style-based approach,” Davis explained. “From a portfolio construction perspective, these strategies provide focused exposure while maintaining the benefits of active management and Capital Group’s fundamental research.”
High Hopes for High Yield
With CGHY, Capital Group is looking to help advisors unearth opportunities in the still largely passive high yield ETF space. Roughly 7% of the high yield ETF universe is actively managed, versus close to 80% on the mutual fund side. Investor appetite has also steadily returned to the space. Following their fifth-worst monthly showing on record, high yield ETF flows finally returned with a vengeance in May. In that month, they brought in more than $5 billion.
Ultimately, CGHY rounds out the firm’s suite of taxable, active fixed income ETFs, It draws on its extensive experience managing nearly $50 billion in high yield assets.
“We believe the ability for active managers to add value in this relatively inefficient market underpins the outsized preference for actively managed high yield in mutual funds,” Davis noted. “We think this is likely to transfer to the ETF vehicle and CGHY as a truly active high yield ETF in the market.”
To that end, CGHY can play a pivotal role for advisors and asset allocators looking to meet a higher income objective.
Rising RIA Appetite for Active
RIAs historically have been users of passive ETFs. However, Davis noted a recent overall shift in the ETF landscape. Given the two-year stretch of hefty gains for the S&P 500, many experts agree 2025 is the year for chasing alpha again.
“I think it’s fair to say that ETFs are no longer synonymous with passive,” he said. “About a fifth of our ETF sales have been to RIAs since we first launched just over three years ago. And we think that speaks to the growing understanding and awareness of actively managed ETFs and their benefits. When we speak to RIAs that we work with, we know they’re increasingly interested in building model portfolios for their clients using active ETFs.”
Capital Group continues to solidify its position as a leader in active ETF innovation. By combining its decades of investment expertise with a sharp focus on high-demand areas like growth, value and high yield, the firm is empowering advisors and RIAs to build more targeted, alpha-seeking portfolios. As investor appetite for active strategies grows, Capital Group’s expanding ETF suite — backed by its multimanager approach and deep research — positions it at the forefront of the evolving ETF landscape.
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