Capital Group Companies

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Capital Group Companies, Inc.
Private
IndustryFinancial services
Founded1931; 88 years ago (1931)
FounderJonathan Bell Lovelace
Headquarters,
Area served
Worldwide
ProductsSub-advisory services to mutual funds and other pooled investment vehicles
AUMIncrease $1.86 trillion (March 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 $1.87 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, 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[edit]

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] Capital Group is a shareholder in BAE Systems and Lockheed Martin.[10][11]

Former British PM Theresa May's husband Philip May has worked as a relationship manager for the Capital Group.[12]

Offices[edit]

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.[13] Its Asia offices include Beijing, Hong Kong, Mumbai, Singapore and Tokyo. Capital Group also has a growing presence in Sydney[14] and a private equity office in São Paulo.

References[edit]

  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. ^ "Lockheed Martin Corporation (LMT) Ownership Summary". NASDAQ.com.
  11. ^ "Capital Group Halves Interest In BAE Systems To 5% (ALLISS)". Morningstar. 29 May 2019.
  12. ^ 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.
  13. ^ Samuel, Juliet (October 16, 2014). Capital Group turns to wealth for International Expansion. Wall Street Journal
  14. ^ Smith, Mark (December 1, 2014). Capital Group expands retail sales team. Financial Standard

External links[edit]