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Fund Spy

Capital Group’s Superlatives and Challenges

One challenge largely met, the other not so much.

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Capital Group, well known in the United States as the parent of the American Funds open-end lineup, has long been a model asset manager in many respects and was a 2019 nominee for Morningstar’s Exemplary Steward award. It has, however, faced two big challenges over the past decade: one in fixed income, which it has largely met; the other in staying ahead of capacity constraints, where there’s room for progress.

This Fund Spy represents the latest conclusions drawn from Morningstar’s ongoing stewardship evaluation of Capital, which includes two visits with firm leadership in March 2019. It first discusses the superlatives that make Capital stand out, including its periodic firmwide efforts to rethink its organization. It then moves on to Capital’s fixed-income improvements and the need to specify the multimanager system’s limits within equities.

Alec Lucas does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.