Capital Group Launches 5 Active ETFs

Capital Group is launching five active exchange-traded funds Thursday on the New York Stock Exchange, expanding the investment firm’s active ETF selection to 14. The lineup includes Capital Group’s first multi-asset ETF as well as two fixed income and two equity funds.

Why it matters: Capital Group’s existing nine active ETFs had surpassed $12 billion in assets under management as of Aug. 31. The firm, which offers the American Funds, managed more than $2.3 trillion in equity and fixed income assets as of June 30. The asset manager says it has led in year-to-date flows, amassing $12.4 billion into vehicles including mutual funds, ETFs and actively managed portfolios.

What to know: Scott Davis, Capital Group ETF head, said in a statement that the company sees increasing demand for fixed income ETFs in particular, “as the Federal Reserve appears to be nearing the conclusion of its interest rate cycle, and we anticipate an influx of historic cash flows into active fixed income services.”

With the new ETFs, the asset manager seeks to meet a wider range of investor objectives, he told ThinkAdvisor. The multi-asset funds represent stocks and bonds, not alternative assets, Davis said. “An actively managed strategy from Capital offers an opportunity to earn above-market returns.”

The new ETFs, their objectives and expense ratios are:

• Capital Group Core Balanced ETF (CGBL): Provide a balanced approach to total return, including income and capital gains, that is consistent with long-term capital preservation; 0.33%
• Capital Group Core Bond ETF (CGCB): Provide as high a level of current income as is consistent with capital preservation; 0.27%
• Capital Group Short Duration Municipal Income ETF (CGSM): Provide current income exempt from regular federal income tax, consistent with a short duration profile and with capital preservation; 0.25%
• Capital Group Dividend Growers ETF (CGDG): Provide long-term total returns; 0.47%
• Capital Group International Equity ETF (CGIE): Provide prudent capital growth and conservation of principal; 0.54%

Looking ahead: Active ETFs are a rapidly changing and growing space and could add $2 trillion in assets to the industry by 2030, Davis told ThinkAdvisor. While active ETFs currently represent less than 6% of industry assets, “we see that growing substantially.”