Capital Group New Geography Equity ETF CGNG

American Funds’ parent Capital Group announced that manager Matt Hochstetler stepped off American Funds New World (including several non-US domiciled vehicles and a sibling exchange-traded fund) on Aug. 1, 2026, and departed the firm. He had spent just over half of his 20-year investment career at Capital Group and managed roughly 5% of the fund’s assets. In response, the firm made a sensible addition to the management team, naming Leo Hee as a comanager. Hee has managed a sleeve of American Funds International Growth and Income and American Funds World Growth and Income for more than 10 and six years, respectively, so he’s well-versed in foreign investing. Both strategies also have some emerging-market exposure, and that’s relevant for this strategy. Hee has 33 years of industry experience and has been at the firm for more than 20 years. The management team of Brad Freer, Saurav Jain, Dawid Justus, Carl Kawaja, Winnie Kwan, Piyada Phanaphat, Akira Shiraishi, Kirstie Spence, Tomonori Tani, Lisa Thompson, and Chris Thomsen remains in place. As such, these changes do not alter the strategy’s High People rating or its Morningstar Medalist Ratings.

Capital Group New Geography Equity ETF benefits from a seasoned management team, robust resources, and a sensible, risk-averse approach.

Although the firm made some lineup changes at the start of 2026 following a comprehensive internal review, the strategy continues to benefit from a deep bench of capable managers. Two managers moved subsidiaries but continue to oversee assets, while Carl Kawaja assumed a leadership role. In addition, Rob Lovelace, who ran just 5% of assets, stepped off on April 1, 2026, while Saurav Jain was disclosed as a manager. Jain served as a comanager on another emerging-market strategy for more than five years, so this is well within his wheelhouse. Overall, 11 managers run the exchange-traded fund, supported by more than 150 analysts. All managers have more than 15 years of investment experience with the firm.

This ETF is similar to the mutual fund American Funds New World. Capital Group’s portfolio strategy management group adapts that fund into a more compact, liquidity-aware portfolio while preserving its stylistic traits. The main difference between this ETF and its parent strategy is the exclusion of a fixed-income sleeve run by another portfolio manager.

The mutual fund’s long-term success reflects its flexible, risk-averse approach to emerging markets. In addition to investing in stocks domiciled in emerging markets, managers can allocate assets substantially to developed-market firms that derive at least 20% of their revenue from emerging economies, often resulting in a less volatile portfolio than peers. This flexibility expands the opportunity set and has led to top holdings such as Microsoft, Nvidia, Broadcom, and Airbus alongside emerging-market names.

Another recent change to the mutual fund—the shift in prospectus benchmark to the MSCI Emerging Markets Index from the MSCI ACWI—should have minimal impact, according to the firm. The team continues to employ a bottom-up approach focused on identifying the most compelling opportunities that meet its revenue criteria, regardless of domicile. The ETF will shift its prospectus index to the MSCI Emerging Markets Index in August 2026.

This differentiated approach produces a portfolio that stands apart from both peers and the MSCI Emerging Markets Index. Its above-average exposure to stocks domiciled in developed markets has contributed to lower volatility and stronger downside protection, while still participating meaningfully in market rallies.

That same positioning can lead to relative underperformance during periods when emerging-market-domiciled stocks lead, as observed in 2025, when the ETF’s total returns lagged the benchmark and finished in the Morningstar Category’s bottom half. Still, long-term results remain compelling: the mutual fund ranked in the top quartile of the category over the trailing 10-, 15-, and 20-year periods through March 2026. While this ETF only launched in June 2024, it should display similar performance and remains a strong option for emerging-market exposure.

This ETF employs a process similar to that of its reference vehicle, American Funds New World, and earns the same Above Average Process rating thanks to its flexible, risk-conscious approach. It seeks to damp the volatility typically associated with emerging-market equities by investing a share of the portfolio in developed-market firms that derive significant revenue from emerging economies.

Management's revenue-centric approach to investing means that results are driven more by emerging markets' growth than might otherwise be the case. The team believes that while emerging markets are growing faster than developed markets, emerging-market firms aren't necessarily the best way to capitalize on that growth. In some cases, developed-market multinationals may be better positioned. Firms with at least a fifth of their revenue or assets attributable to the developing world are fair game here—provided at least 45% of the strategy's assets are invested directly in emerging-markets-domiciled securities.

At the beginning of 2026, the firm moved the reference fund’s prospectus benchmark to the MSCI Emerging Markets Index from the MSCI ACWI, which it had long used. This change should have minimal impact, according to the firm, though, as the managers maintain a bottom-up approach focused on identifying the most compelling opportunities, regardless of domicile. Developed-market holdings remain part of the toolkit when they offer superior prospects. The ETF will shift its prospectus index in August 2026.

American Funds' multimanager system lets the strategy's 11 named managers play to their strengths. Each runs an independent sleeve of the portfolio, which enhances diversification and further mutes overall volatility, while also allowing consensus positions to emerge independently.

The firm’s portfolio strategy management group constructs this ETF by distilling holdings from the mutual fund (minus a small, fixed-income sleeve) into a more compact portfolio based on liquidity factors while ensuring the stylistic traits remain intact.

This ETF differs from its reference strategy, American Funds New World, in several respects. It does not hold any fixed income like the mutual fund, which had a 2.8% allocation as of December 2025. Additionally, the ETF is more compact than the mutual fund, with roughly 225 holdings versus more than 350 equity holdings in the mutual fund. The ETF typically holds higher weightings in the mutual fund’s top bets, while eliminating smaller holdings, typically those under 20 basis points. Still, it inherits similar stylistic traits and keeps tracking error low, ensuring a similar performance profile to the mutual fund.

Since the mutual fund’s 1999 inception, it has, on average, kept more than a third of its assets in developed-market stocks (excluding South Korea and Taiwan). The ETF’s allocations are very similar to those of the mutual fund. As of February 2026, the ETF’s developed-market weighting stood at 41%, thanks in part to its US exposure, while its emerging-market equity stake by domicile was 55.8% (including Korea and Taiwan). Judged by revenue sources, however, the ETF has more emerging-market exposure. As of February, the equity portfolio derived about 65% of its revenue from the developing world.

The portfolio holds less in East Asian stocks than the MSCI Emerging Markets Index. It remains underweight South Korea and Taiwan in part because the team has historically not classified those markets as emerging. The ETF’s 11.7% stake in China stocks is much lower than the index’s 22.4%. Most notably, the ETF has been underweight technology giants, such as Taiwan Semiconductor and Samsung, and Chinese companies Tencent and Alibaba, which top the index.

This ETF shares a similar team as its reference vehicle, American Funds New World. Capital Group’s organizational strengths, as well as the managers' experience, ability, and strong supporting cast, warrant a High People rating. Capital Group, the parent of American Funds, has split the strategy's equity stake between subsidiaries Capital Research Global Investors, Capital World Investors, and Capital International Investors.

After a firmwide self-assessment, this strategy underwent some personnel changes at the start of 2026. Two managers, Dawid Justus and Piyada Phanaphat, moved subsidiaries but remain on the fund. Justus served as CWI’s principal investment officer, in charge of allocating capital across CWI’s management team. With his move to CRGI, veteran leader Carl Kawaja took over as CWI’s PIO. Additionally, Rob Lovelace, who only ran 5% of assets, stepped off the strategy on April 1, 2026, while Saurav Jain was disclosed as a manager. Jain served as a comanager on another emerging-market strategy for more than five years, so this is well within his wheelhouse. These moves should have minimal impact.

This strategy remains in the hands of firm veterans with exceptional support. Brad Freer leads the whole strategy and CRGI's side, which includes Christopher Thomsen, Winnie Kwan, Justus, and Phanaphat. Kawaja leads CWI's team of Tomonori Tani and Matt Hochstetler, while Lisa Thompson oversees CII’s group, including Akira Shiraishi and Jain. Each manager runs an independent portfolio sleeve, with Freer, Kawaja, and Thompson ensuring stylistic balance across the strategy. In total, 11 managers oversee the fund, supported by more than 150 analysts.

Unlike the reference strategy, this ETF does not include fixed-income manager Kirstie Spence or any fixed income.

Capital Group stands out from the pack as it enhances capabilities around strong core competencies. It earns a High Parent rating.

Since 1931, Capital Group, parent of American Funds, has thoughtfully built out capabilities to become one of the world’s largest asset managers, managing more than USD 3 trillion dollars. Building on the success of its long-term-oriented, multiple-manager system for global equities, the firm has developed robust fixed-income and multi-asset units, each managing more than USD 500 billion. In January 2026, as part of its periodic review of its now five distinct research organizations, Capital Group implemented changes to its equity investment subsidiaries. This exercise resulted in most equity strategies having at least one portfolio manager change, but according to the firm, it better balances each of Capital Group’s three equity groups in terms of investment breadth and helps the firm better align leadership opportunities across the groups. These kinds of shifts have occurred before, with the last coming in 2018.

Capital Group has also turned its attention to some modern opportunities. To address public/private market convergence trends, it launched in April 2025 two semiliquid funds with private market giant KKR. In keeping with its signature portfolio management approach, it splits those funds into multiple sleeves, which are managed independently by distinct managers at each firm. Capital Group plans to deepen this relationship with target-date and model portfolios, as well as public/private equity funds. On the other end of the spectrum, although the firm is firmly dedicated to active management, it has also acknowledged investor preference for passive investing and has thus partnered with indexing stalwarts Vanguard, BlackRock, and Schwab on active/passive models. Capital Group’s proven investment prowess, strong reputation among investors, and scale mean it can be selective with its partnerships.

In addressing another recent trend, since early 2022, the firm has launched more than 25 active exchange-traded funds globally, most of which are distinct, but several are similar to some of its legacy American Funds mutual funds. Unlike some of its peers, though, it has not filed for SEC exemptive relief to offer ETFs as a share class.

That’s a lot of change for such a storied and sizable firm, but Capital Group has a long history of serving investors well.

This ETF employs a similar team and process (minus a small, fixed-income portion) as its reference vehicle, American Funds New World, and should display a similar performance profile. Since the ETF’s late June 2024 inception through March 2026, its 14.7% annualized gain lagged the MSCI Emerging Markets Index’s 17.9% gain and the diversified emerging markets category norm’s 17.2%. It bested the mutual fund’s R6 shares by 75 basis points.

American Funds New World has produced strong long-term results. Over the trailing 10-, 15-, and 20-year period ended in March 2026, the R6 shares’ annualized return topped those of the index and landed in the top 25% of the category. The mutual fund fared even better on a risk-adjusted basis, in part because of its developed-market stock exposure.

The mutual fund can, however, lag in emerging-market rallies thanks to its broad geographic exposure, which includes a large allocation to developed markets. That was evident in 2025 as foreign stocks, and in particular emerging markets, outperformed. The strategy’s 28.6% gain lagged the emerging-market index by 5 percentage points and landed in the category’s bottom half. Underweighting top index holdings such as Samsung and Alibaba detracted, relative to the index, as did overweighting developed-market stocks Novo Nordisk and Microsoft.

Yet, investors who stuck with the mutual fund through bouts of underperformance have done well, as it has typically outperformed in downturns. The R6 shares’ five-year downside capture ratio shows it has, on average, only lost 77% as much as the index during months with negative returns.

The mutual fund typically is more growth-oriented than the benchmark, which has helped it perform well in broad growth-led market rallies when growth stocks shone. For example, in 2023’s strong market, the mutual fund handily outpaced the index.

Capital Group New Geography Equity ETF's Prospectus Adjusted Expense Ratio is 0.64% per year. It places it in the cheapest quintile of the Morningstar US Fund Diversified Emerging Mkts Category, where the median fee is 1.04% per year. This cost positioning translates into a Medalist Rating Price Score of 1.68, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.