For nearly a century, Capital Group has maintained a low profile, operating quietly under an unremarkable name while providing mutual funds to millions of investors. Its sprawling Los Angeles headquarters even lacks prominent branding.
However, over the past decade, the firm has watched passively as competitors reinvented themselves, with the rise of index investing and ETFs eroding its core active management business. Now, insiders reveal that the world’s largest pure-play active asset manager is taking bold action.
Breaking from its traditionally subdued approach, Capital Group has launched an aggressive marketing campaign, expanded its ETF lineup, and deepened its private markets partnership with private equity giant KKR & Co LP. These efforts, spearheaded by CEO Mike Gitlin, mark the most fundamental strategic shift since the firm’s founding in 1931.
Facing immense industry disruption and rivals like Apollo Global Management and Blackstone aggressively courting retail investors, the $3.3 trillion asset manager fears falling behind. Capital Group, known for its American Funds series, is also a major investor in top S&P 500 constituents like Nvidia and Amazon.
"Every client is narrowing their preferred partner list," said Gitlin, 55, who declined an interview but responded via email. He emphasized that a higher profile would strengthen client relationships and attract new investors. "We are constantly evolving."
Wealth advisors are streamlining their partnerships to just two or three asset managers offering diverse strategies, including less-liquid private market investments. This has spurred alliances between traditional firms serving Main Street investors and alternative asset managers specializing in private deals.
According to a memo, Gitlin is collaborating with KKR to launch retail-focused funds, with plans to expand the partnership next year. This includes Capital Group’s first target-date retirement fund blending public and private assets, as well as a model portfolio for retail investors. The firm will also manage assets for KKR’s Global Atlantic insurance unit.
KKR co-CEOs Joe Bae and Scott Nuttall stated the partnership aims to provide diversified portfolios combining public and private markets. "Together, we can bridge the gap between institutional and retail investment opportunities," they said in an email.
The transformation is critical for Gitlin, who took the helm in 2023 as investors shift away from mutual funds—long Capital Group’s strength. Over the past decade, its stock-focused mutual funds saw consistent net outflows, though fixed-income, retirement products, and new ETFs have helped offset losses.
"Private markets are the natural next frontier for firms like Capital Group," said James St. Aubin, CIO of Ocean Park Asset Management. "They can’t rely on old strategies to grow—or even maintain—assets. The space is crowded, so it won’t be easy."
So far, the two new KKR-partnered funds have amassed over $500 million in assets. Gitlin noted that matching KKR’s 50-year track record would take decades, emphasizing partnerships over acquisitions.
**Unconventional Culture** Capital Group’s secretive, idiosyncratic culture—sometimes likened to a cult—has long fascinated the industry. Employees use initials instead of names in communications, and the term "performance" is taboo (replaced with "results"). With portfolio managers averaging 20-year tenures, these quirks are deeply ingrained.
Now, as it ventures into private markets, the firm is shedding some traditions to appeal to retail investors. This year, it commissioned a branded hot air balloon, "Wind of Frankfurt," to promote its business in Germany. It also set up a pickleball court at a California industry event, drawing thousands of finance professionals.
**Crown Jewel** After briefly dabbling in private markets earlier, Capital Group spent two years meticulously planning its expansion. Its managers often discuss long-term investments over quick trades—aligning well with private equity strategies.
This time, the firm aims for scale, leveraging its own resources. The partner search was dramatic, with pitches from Apollo, Blackstone, Carlyle, and others. Some executives visited Capital Group’s HQ, while its team traveled to the East Coast for follow-ups.
Capital Group’s crown jewel is its vast distribution network and ties to financial advisors. The winning partner gains access to millions of clients: the firm serves over 20 million households, and 75% of U.S. advisors (216,000) use its products.
The deal with KKR was finalized after Gitlin met co-CEO Nuttall at home. KKR won due to its diversified strategies and non-overlapping businesses: it sources private assets, while Capital Group distributes them. Both firms cited cultural alignment.
Two new funds—Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+—will allocate 60% to public debt and 40% to private credit (direct lending, asset-backed debt). Two more funds in development will target private equity and real assets.
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