On Thursday, Capital Group expanded its suite of ETFs with the launch of the Capital Group U.S. Small and Mid Cap ETF (CGMM).
For its investors, CGMM seeks to provide capital appreciation over the long term. The fund has a net expense ratio of 51 basis points.
Going for Growth
Primarily, CGMM’s portfolio is constructed using U.S. small-cap and midcap equities. This fund takes a long-term approach, seeking companies with potential to grow into larger-cap ranges over time.
CGMM is launching at a potentially opportune time for both small- and midcap ETFs in the United States. Expectations for this year’s economic policy may work in favor of the lower-cap ranges. As such, the fund may be able to capitalize on broadening growth opportunities for equities across both cap spectrums.
When it comes to choosing assets to invest in, CGMM’s portfolio team seeks companies that offer attractive valuations at the time. The fund also uses a fundamental research process to look for sectors and industries that might offer deep growth potential.
“If you look at some of the macro trends — some of the reshoring or onshoring, U.S. domestic small- and midcap companies may be poised for a lot of growth,” said Scott Davis, head of ETFs at Capital Group. “We feel well-positioned with our fundamental research.”
Model ETFs on the Way
CGMM comes online as Capital Group gears up to release ETF models later in the year. Following success with its mutual fund models, Capital Group is expanding model coverage to ETFs to meet mounting investor demand.
“We believe ETF models are going to be the next driver of exponential growth across the industry,” Davis notes.
Currently, Capital Group has more than 20 different ETFs listed in the United States. One of the largest funds within its library, the Capital Group Dividend Value ETF (CGDV ), has well over $12 billion in assets under management.
“In the last three years, Capital Group has built out one of the strongest active ETF lineups,” said Todd Rosenbluth, head of research at VettaFi. “This new fund will further help cement its leadership.”
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