Capital Group, home of American Funds, is launching six actively managed exchange-traded funds that begin trading on the New York Stock Exchange Thursday, marking the more than 90-year-old investment manager's first foray into the ETF space, according to a Capital Group spokeswoman.
The ETFs will have expense ratios ranging from 0.33% to 0.54%, the spokeswoman said. One ETF will focus on fixed income, three will invest mainly in U.S. equities and two equity strategies will cover international and global.
Capital Group's entry into the ETF market will mark a "key milestone for active ETFs," given the amount of assets it manages, said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, in comments emailed to Pensions & Investments Wednesday. Los Angeles-based Capital Group had $2.7 trillion in assets under management as of Dec. 31, 2021, the spokeswoman said.
Active ETFs accounted for 10% of last year's record $910 billion in U.S.-listed ETF inflows, despite representing just 4% of ETF assets, according to CFRA data.
"There remains tremendous room for growth for such funds as investors gain comfort with the more tax-efficient approach to active management," Mr. Rosenbluth said.
The Capital Group ETFs, which will disclose full holdings daily, will "leverage managers that support popular and strong-performing American Funds mutual funds," he said.
"We think Capital Group can be a top-tier ETF provider in the next few years," Mr. Rosenbluth said.
Nate Geraci, president of The ETF Store, an independent registered investment adviser specializing in ETFs, said Capital Group will have its work cut out for it given that it's entering the space nearly 30 years after the first U.S.-listed ETF debuted.
Investors have continued to gravitate toward the lowest-cost, plain-vanilla index ETFs for the core of their portfolios, "while mixing in higher-octane active strategies as satellite holdings," Mr. Geraci said in an email Wednesday.
"The question is whether Capital Group can thread the needle and find a home in the middle," he said.
"It won't be easy, but Capital Group does have (a) strong pedigree and brand recognition, which could help them find an audience."
The active ETF market is still "in its early days," said Holly Framsted, director of ETFs at Capital Group, in comments emailed to Pensions & Investments Wednesday.
The six funds are the Capital Group Growth ETF, Capital Group Core Equity ETF, Capital Group Dividend Value ETF, Capital Group International Focus Equity ETF, Capital Group Global Growth Equity ETF and the Capital Group Core Plus Income ETF, according to Capital Group's website.
