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Capital Group to Debut 3 Active Fixed Income ETFs

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What You Need to Know

  • Active fixed income ETFs are growing twice as fast as passive, Capital Group says.
  • Fixed income ETFs represent over $1.2 trillion in AUM, with active strategies about 10% of the market.
  • The firm sees “clear demand” for active fixed income ETFs.

Capital Group plans to introduce three actively managed fixed income ETFs by early November, bringing the investment management firm’s ETF offerings to nine.

After launching its initial suite of six actively managed, transparent ETFs early this year — five equity and one fixed income — Capital Group registered with the Securities and Exchange Commission today to add three more:

  • Capital Group Municipal Income ETF [NYSE: CGMU], which aims to provide high current income exempt from regular federal income tax, consistent with the preservation of capital. (Portfolio managers: Courtney Wolf, Mark Marinella and Jerome Solomon)
  • Capital Group U.S. Multi-Sector Income ETF [NYSE: CGMS], which seeks to provide high current income and capital appreciation. The fund will invest a minimum of 80% with U.S.-domiciled issuers. (Portfolio managers: Damien McCann, Xavier Goss, Scott Sykes, Shannon Ward)
  • Capital Group Short Duration Income ETF [NYSE: CGSD), which aims to provide current income, consistent with a short duration profile and capital preservation. (Portfolio managers: Vince Gonzales, Steve Lotwin)

Fixed income ETFs have grown to represent over $1.2 trillion in assets under management, with active products making up around 10% of the market, according to Mike Gitlin, global head of fixed income at Capital Group.

“There is a clear demand for the kinds of strategies we’ll launch later this year. Over the last five years, our fixed-income business has doubled in size thanks to our track record of delivering consistent results for investors,” he said in a statement.

“We are well-positioned to continue this growth with our expanded fixed-income capabilities via the ETF vehicle. These three new income-oriented ETFs differ from what is currently offered by our American Funds mutual funds and today, the market segment is mostly served by passive ETFs,” Gitlin added.

Holly Framsted, director of ETFs at Capital Group, noted that investors historically have been offered ETFs as passive equity vehicles. “Today, active fixed income ETFs are growing at twice the rate of passive. Our new fixed income ETFs add important building blocks to our ETF suite, all designed to sit at the core of a well-diversified portfolio,” she said.

Total AUM among Capital Group’s six current ETF strategies has surpassed $2 billion, the firm said.