With an impressive $2 billion of ETF assets gathered since launching their first ever ETF products in February, Capital Group has set the stage for new products in the fall. The large active asset manager, behind many popular mutual funds under the American Funds brand, filed with the SEC today to launch three new fixed income ETFs.
Like the Capital Group Core Plus Income ETF (CGCP ), the three pending ETFs will be actively managed through a team approach and be fully transparent:
- Capital Group Municipal Income ETF ((CGMU ))
The fund’s investment objective is to provide a high level of current income exempt from regular federal income tax, consistent with the preservation of capital.
- Capital Group U.S. Multi-Sector Income ETF ((CGMS ))
The fund’s investment objective is to provide a high level of current income. Its secondary investment objective is capital appreciation. The fund will invest a minimum of 80% with issuers domiciled in the U.S.
- Capital Group Short Duration Income ETF ((CGSD ))
The fund’s investment objective is to provide current income, consistent with a short duration profile and with the preservation of capital.
“Historically, ETFs have been offered as passive, equity vehicles," explained Holly Framsted, Director of ETFs at Capital Group. “Today, active fixed income ETFs are growing at twice the rate of passive. Our new fixed income ETFs add important building blocks to our ETF suite, all designed to sit at the core of a well-diversified portfolio."
Once these three new fixed income ETFs come to market, Capital Group’s ETF lineup can further align with an advisor’s asset allocation strategy. Currently, the firm offers five equity ETFs and just one fixed income product. The Capital Group Dividend Value ETF (CGDV ) and the Capital Group Growth ETF (CGGR ) are the firm’s two largest ETFs with $461 million and $453 million, respectively. CGDV and CGGR have pulled in $270 million of new money in the past month as the products gained traction.
Active managers have had ample opportunity to demonstrate the potential value-add they can provide given the volatility in the equity and fixed income markets. Increasingly, advisors are turning to active ETFs to receive the benefits of security selection and macroeconomic expertise through a liquid, tax-efficient vehicle.
While it often takes time for new, actively managed ETFs to build a following, advisors are extremely familiar with the experienced, fundamental approaches employed by Capital Group.
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