Happy 3rd Anniversary, Capital Group ETFs

An actively managed fund hitting its three year track record used to be a major milestone. A Morningstar rating would follow. If the star rating was strong, inflows would usually manifest. However, the growing demand for young active ETFs has proven that some investors are not waiting for a magic anniversary to invest. Capital Group has many such $1 billion ETF examples to support this. The firm’s active ETF business turned three years old this week, with $57 billion in assets. Capital Group managed $2.8 trillion at the end of 2024. Known initially for their American Funds mutual fund lineup, the firm has been managing money since 1931. In three years, Capital Group has quickly made a name for itself in the ETF industry. It is the fifth largest manager of active ETFs, ahead of many more established ETF providers. Two of the firm’s first active ETFs have more than $10 billion in assets; another ten have over $1 billion. This successful lineup touches on a wide range of investment styles that are supporting advisor asset allocation strategies.Capital Group’s Success Has Helped Drive Active ETF Assets“Active ETFs were just over 4% of the ETF market when we launched our first six strategies three years ago,” explained Holly Framsted, head of Product Group, Capital Group, in an email to TMX VettaFi. “That number has more than doubled in three years to around 9%, and I think our suite of active, transparent ETFs – some of the first designed to sit at the core of investor portfolios – has been a big driver of that growth.“ “ETFs are no longer synonymous with passive and advisors and investors alike can expect to see expanded use cases for this dynamic vehicle. From all active ETF models, which we will launch later this quarter, to more institutional applications." Popular Value and Growth ETFsThe Capital Group Dividend Value ETF (CGDV A-) is the largest, with $14 billion in assets. The large-cap value fund is mostly invested in U.S. stocks like American International Group and Microsoft. However, a few international stocks, like British American Tobacco, are also inside. CGDV also owns recent dividend payers, Alphabet and Meta Platforms.  This is different from many dividend index based ETFs that require a long record of dividend growth of their holdings. CGDV has significantly outperformed its Morningstar category since the fund’s Feb 2022 inception. The Capital Group Growth ETF (CGGR B+) has also outperformed its large-cap growth Morningstar category since its inception three years ago. The $11 billion ETF owns many of the stocks found in other growth strategies, but in different proportions. Meta Platforms and Tesla were recently CGGR’s largest, at 9.8% and 6.2%, respectively. Meanwhile, Microsoft and NVIDIA were only 4.4% and 3.1% of assets.  CGDV and CGGR came to market in February 2022, along with some active global/international equity ETFs and a fixed income fund. The Capital Group Global Growth Equity ETF (CGGO B+), the Capital Group International Focus Equity ETF (CGXU B), and the Capital Group Core Plus Income ETF (CGCP ) currently manage between $3 billion and $6 billion in assets.Many Younger Active ETFs Strong From the StartOther Capital Group active ETFs in the $1 billion club are younger and still popular. The Capital Group core Balanced ETF (CGBL A-) launched in September 2023, providing equity and fixed income exposure in one portfolio.  While some firms have struggled to build a base for a balanced ETF, CGBL has $1.8 billion in assets. CGBL recently had approximately 65% of assets in U.S. and international equities, with the remainder in bonds or cash. The fund has flexibility to shift the asset allocation, as well as favor growth or dividend-paying stocks. Broadcom and Meta Platforms were the fund’s largest recent equity positions.  The Capital Group Dividend Growers ETF (CGDG A-) also launched in September 2023, and now has $1.7 billion in assets. Relative to CGDV, CGDG is more geographically diversified. CGDG had 47% of assets invested in international equities, significantly higher than CDGV’s 7% stake. Airbus, SAP and Taiwan Semiconductor were among CGDG’s largest holdings, along with Broadcom, Morgan Stanley and Philip Morris International.Active ETF Product Expansion Has Continued to Meet Strong DemandDemand for active ETFs has been strong in recent years. Active ETFs captured 26% of the U.S. industry net inflows in 2024, up from 21% in 2023 and 9% in 2022. To meet advisors where they are, Capital Group further expanded its lineup of active ETFs in 2024 and in 2025. The launches filled in styles such as ultra short bonds and small-and-midcap companies. Meanwhile, Capital Group built out its ETF presence globally in 2024, with the launch of active Canadian ETFs. Happy third anniversary to the Capital Group active ETF franchise. I can’t wait to see the team behind these funds at the Exchange conference.For more news, information, and strategy, visit ETFDB.