Capital Group, a Los Angeles-based firm renowned for its active fund management, is set to expand its fixed income business and accelerate its international footprint to counter client withdrawals and compete with faster-growing fund rivals, CEO Mike Gitlin revealed to Reuters. With assets under management currently at $2.6 trillion, the firm aims to increase this to around $4 trillion over the next seven years. Gitlin emphasized the importance of diversifying away from the firm’s core equities franchise and adapting to the changing market dynamics, which have seen a significant shift towards passive and private investing. Despite recent net outflows from its U.S. equity funds, Capital Group remains a top shareholder in major companies like Microsoft, Meta Platforms, and General Electric.
To adapt, Capital Group is prioritizing the growth of its fixed income segment, which Gitlin previously led, with assets in this sector already growing nearly 40% in four years to $507 billion. Gitlin anticipates that central bank rate cuts will further boost active bond market investments. Additionally, the firm plans to increase its overseas client assets from the current $70 billion to around $175 billion by 2031. Capital Group’s strategy also includes partnerships with other fund firms to offer passive or private funds, as seen with its recent collaboration with KKR and the launch of actively-managed ETFs in 2022, which have already amassed $28 billion in assets. This strategic pivot coincides with Capital Group’s upcoming centennial in 2031, underscoring its commitment to long-term growth and adaptation to evolving client demands.