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Fund Spy

Capital Group, Part II: Knowing Its Limits

This longtime manager of massive funds needs to clarify its own capacity constraints.

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A prior Fund Spy argued that American Funds parent Capital Group’s long-term investment results, fixed-income improvements, and industry leadership ensure its relevancy even as cheap passive options and regulatory changes pressure active managers to cut costs and improve performance.

This Fund Spy focuses on capacity. Capital Group’s divide-and-conquer approach to asset management has long enabled it to run massive funds. However, it’s time for the firm to better specify the funds’ capacity and explain its reasoning for those limits.

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