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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
ProductsSub-advisory services to mutual funds and other pooled investment vehicles
AUMIncrease $2.06 trillion (December 2019)[1]
Number of employees
7,500 (June 30, 2017) [2]
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 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.

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 prior to the Wall Street Crash of 1929.[citation needed]

In 1933, Lovelace's firm took over management of The Investment Company of America, which he had launched at E.E. MacCrone in 1927.[3] For the next 20 years, his firm enjoyed modest success.[4] As mutual funds gained in popularity in the 1950s, Capital's roster of mutual funds grew.[citation needed]

The International Resources Fund, established in 1954,[5] 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.[6]

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.[7] 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.[8]

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.[9]

Former British PM Theresa May's husband Philip May has worked as a relationship manager for the Capital Group.[10]

Investments

As of 2019, Capital Group held 5% of BAE Systems[11] and 9% of British American Tobacco.[12]

Leadership

The chairman and chief executive is Tim Armour,[13] who took over in 2015 after the death of James Rothenberg.[14]

Strategies

Funds typically have between 3 and 13 managers; in addition to financial research, the managers may do on-the-ground due diligence, and in 2018 logged 12,400 to facilities such as factories.[15] It has 3 independent divisions focused on equities: Capital World Investors, Capital Research Global Investors and Capital International Investors.[16]

Funds

As of 2019, it had 36 funds.[17] Growth Fund of America, founded in 1973, was the largest actively-managed fund as of 2020 with around $150 billion.[18]

Ownership

As of 2019, the company is owned by 450 partners.[19]

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.[20] Its Asia offices include Beijing, Hong Kong, Mumbai, Singapore and Tokyo. Capital Group also has a growing presence in Sydney[21] and a private equity office in São Paulo.

See also

References

  1. ^ https://corpcomm.capgroup.com/PoliteMail/files/QFY19AUM.pdf
  2. ^ https://www.capitalgroup.com/our-company/news-room.html
  3. ^ (May 4, 1927) New Investment Company. New York Times
  4. ^ Ellis, Charles D. (2004). Wall Street People: True Stories of Today’s Masters and Moguls. New York: John Wiley & Sons. Pg. 193
  5. ^ Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg. 196
  6. ^ Ellis, Charles D. (2004) Capital: The Story of Long-Term Investment Excellence. Pg 196
  7. ^ Willis, Clint (September 1997). The Giant Nobody Knows. Mutual Funds Link unavailable
  8. ^ Petruno, Tom (November 26, 1990). Capital Performance. The Los Angeles Times
  9. ^ Greene, Andrew (January 10, 2003). Fund Titan: Jon B. Lovelace Jr., Empire Builder. Ignites
  10. ^ Goodley, Simon (12 July 2016). "Philip May: the reserved City fixture and husband happy to take a back seat". The Guardian. Archived from the original on 12 July 2016.
  11. ^ "Capital Group Halves Interest In BAE Systems To 5% (ALLISS)". Morningstar. 29 May 2019.
  12. ^ "BTI Top Institutional Holders". Yahoo! Finance. Retrieved 24 April 2020.
  13. ^ Kapadia, Reshma. "Meet the Active Manager That's Beating the Odds". www.barrons.com. Retrieved 2020-01-06.
  14. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Retrieved 2020-01-06.
  15. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Retrieved 2020-01-06.
  16. ^ "Capital Group Will Restructure Based On Investment Objectives". www.fa-mag.com. Retrieved 2020-03-27.
  17. ^ "Capital Group, bastion of active management, rebounds to $1.9 trillion". InvestmentNews. 2019-05-14. Retrieved 2020-03-27.
  18. ^ "How the Mighty Have Fallen". Morningstar, Inc. Retrieved 2020-03-27.
  19. ^ "The $1.9T Fund Giant With a Crazy Idea About Investing". www.thewealthadvisor.com. Retrieved 2020-01-06.
  20. ^ Samuel, Juliet (October 16, 2014). Capital Group turns to wealth for International Expansion. Wall Street Journal
  21. ^ Smith, Mark (December 1, 2014). Capital Group expands retail sales team. Financial Standard
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