Capital Group, home of American Funds, has launched 12 active-passive model portfolios featuring Capital Group as the strategist. The models will be comprised of American Funds’ actively managed mutual funds and passively managed ETFs from Vanguard, Schwab, and BlackRock. As the strategist, Capital Group will select the passive ETFs in each model and manage the allocations.
“As the needs of financial professionals and investors continue to evolve so has the way we think about delivering our investment solutions to them,” says Kris Spazafumo, head of portfolio solutions and services at Capital Group. “We know that financial professionals are increasingly creating active-passive portfolios for their clients because they want both a low-cost, tax-efficient portfolio with the potential for excess returns.”
The latest series of active-passive model portfolios from Capital Group – including growth, growth and income, preservation and income, and retirement income strategies – have been designed to help financial professionals balance the demands of investment management with the need to scale their businesses and deepen client relationships.
Spazafumo says: “These models were designed to allow financial professionals to scale their practice and free them up to spend more of their valuable time helping clients plan for their financial goals. Like our existing all-active models, the new active-passive portfolios will leverage Capital Group’s objective-based investment philosophy, which emphasises a strategic approach to portfolio construction.”
An area of strategic focus for the firm, Capital Group’s model portfolios business has more than tripled in assets under management since 2018. This brings the total number of model portfolios available nationally from Capital Group to 31. The new models – nine of which will be core and three which will be retirement-income focused — include:
Capital Group Active-Passive Global Growth Model
Capital Group Active-Passive Growth Model
Capital Group Active-Passive Moderate Growth Model
Capital Group Active-Passive Growth and Income Model
Capital Group Active-Passive Moderate Growth and Income Model
Capital Group Active-Passive Conservative Growth and Income Model
Capital Group Active-Passive Conservative Income and Growth Model
Capital Group Active-Passive Conservative Income Model
Capital Group Active-Passive Preservation Model
Capital Group Active-Passive Retirement Income Model – Enhanced
Capital Group Active-Passive Retirement Income Model – Moderate
Capital Group Active-Passive Retirement Income Model – Conservative
In an interview with ETF Express, Spazafumo explains that Capital Group is a leader in the model portfolio space, with 19 active model portfolios, before the launch today, servicing the needs of 38,000 advisers, and some USD34 billion in assets. “Increasingly financial advisers are pairing active and passive together,” Spazafumo says. “We wanted to step up and offer additional choice.”
The firm recognised that advisers and their investors are looking for increased diversification and lower fees, plus the additional excess return that an active part of the portfolio can offer.
“We feel that these are going to offer additional choice to financial advisers,” she says, noting that advisers have to go through a due diligence process to select model portfolios and that Morningstar has recently started rating them. “We are delighted that 15 of our existing all-active America Funds model portfolios were given the Gold rating,” she says.
