Capital Group is set to launch its first wave of ETFs on Thursday, ending its time as one of the longest holdouts of the exchange-traded product market among trillion-dollar asset managers.
The six funds will debut on the NYSE Arca and are listed below:
|Fund||Ticker||Expense Ratio||Strategy/Asset Class|
|Capital Group Core Plus Income ETF||CGCP||0.34%||Current Income/U.S. Treasuries & Corporate Bonds|
|Capital Group Global Growth Equity ETF||CGGO||0.47%||Global Equities/Growth|
|Capital Group Growth ETF||CGGR||0.39%||Growth Equities, 74% U.S.|
|Capital Group Dividend Value ETF||CGDV||0.33%||Current Income/Equity Dividends|
|Capital Group International Focus Equity ETF||CGXU||0.54%||Growth Equity/ex-U.S.|
|Capital Group Core Equity ETF||CGUS||0.33%||U.S. Equity|
The funds are intended to be an actively managed alternative to the lineup of basic equity allocations dominated by the index-powered offerings from iShares’ Core lineup and several of the largest Vanguard funds.
“Up until a couple years ago, [ETFs] were mostly index-based, and I think that really pushed a lot of investors who preferred the ETF vehicle in a style of investing that wasn't necessarily aligned with how they wanted to manage money,” said Capital Group ETF head Holly Framsted in an interview.
The Los Angeles-based, $2.6 trillion asset manager had first filed for regulatory approval from the SEC in 2014, and had clearance to start a trust for actively managed ETFs in 2015, but had long delayed entering the space.
The firm hired Framsted last March to direct its current push into ETFs, and formally announced its intention to launch the suite of six funds last August.
Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, said Capital Group’s entry is a potential turning point for active ETFs, which have tended to lean toward thematic and specialized strategies instead of trying to be core allocations for buy-and-hold investors.
“These new Capital Group ETFs will be more diversified across sectors and themes, and be better positioned to serve as a strong core of the portfolio with management’s long-term time horizon,” he said.
The first set of funds is fully transparent, but Capital Group has the option of launching semitransparent ETFs, after signing a licensing deal with Fidelity in January. Framsted said the firm will lean toward full transparency when preparing new offerings.
“Our baseline is we believe we can be transparent, and the evaluation to be nontransparent or semitransparent would be very dependent upon a specific exposure we're trying to bring to market,” Framsted said.