Capital Ideas^TM

Our private ownership and strong balance sheet afford us the ability to maintain a long-term focus

Since our founding in 1931, Capital Group has been owned primarily by the people who work here every day. Private ownership is a cornerstone of our ability to think long term when it comes to planning and investing. Among other things, it allows us to avoid the quarterly earnings pressures that can constrain publicly-traded companies and lead to short-term thinking. It also gives us the freedom to put client needs first and make strategic decisions that benefit our clients rather than outside shareholders.

Putting clients’ needs first is something that has always been deeply embedded in our mission at Capital Group. The statement of corporate objectives that was adopted by Capital Group in 1963 clarified that first and foremost we would be focused on our clients, then our staff and lastly our shareholders.

This focus on our clients, along with having no debt on our balance sheet and maintaining a substantial amount of available cash, means that in times of volatility, we can hold a steady course and continue to invest for the future. This stability, and focus on delivering superior, consistent returns for our clients over time, has resulted in Capital Group being entrusted with over US$2.1 trillion in assets under management¹.

The stability of our company has enabled us to continue improving our investment capabilities for the benefit of investors during good markets and bad. For example, over the last four years our fixed income team has grown from 164 to 236². Our fixed income investment process has evolved over the last 10 years as the investment environment has changed, to ensure that we continue to meet the needs of our investors. We have greater global coverage both from a research and portfolio management perspective than we have ever had. Our risk management process and control systems have been enhanced and our level of dedicated resources in this area is higher than it has ever been.

The Capital System^TM – a consistent philosophy and process

Early in Capital Group’s history, our leaders realised that their funds would outlast the professionals who managed them. They believed they had a responsibility to provide stability and management continuity to their investors, so they asked themselves a key question: If a portfolio manager left the firm, how could they keep funds going strong?

In the single or ‘star manager’ system, transitions can be extremely disruptive. When a manager retires or leaves a firm or a strategy, portfolios can undergo dramatic changes in approach, holdings and risk characteristics under the new leadership. This requires clients and their advisors to re-examine their original choice of investment. They need to review how the new approach fits with their requirements, and potentially will be forced to make changes – with inevitable implications in terms of risk, time and cost. At Capital Group we pioneered a solution. By dividing funds into sections and giving each of the existing managers a portion to invest, no fund would be too dependent on a single person.

Over several decades, we’ve established and fine-tuned what we call The Capital System^TM, which provides a unique framework for portfolio management that promotes collaboration within the investment groups while encouraging individual investment professionals to pursue their highest-conviction ideas. This approach combines the best independent decisions of experienced investors into a single portfolio that results in greater diversification and reduced volatility.

1. As at 30 September 2022. Source: Capital Group

2. As at 30 September 2022. Source: Capital Group

 

Risk factors you should consider before investing:

• This material is not intended to provide investment advice or be considered a personal recommendation.
• The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
• Past results are not a guide to future results.
• If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
• Depending on the strategy, risks may be associated with investing in fixed income, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.