How Capital Group Finance Manages $2.6 Trillion in Assets

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Capital Group, one of the biggest American financial services companies with over 90 years in business and $2.6 trillion under management, has described Bitcoin asset class as being extremely appealing.

South China Morning Post reported that Mark Casey, the equity portfolio manager and representative of the company, believes Bitcoin is a better alternative than cash and bonds with yields below zero.

Casey stated that due to inflation and monetary policy changes, the $150 trillion in bonds will lose value over the next decade. This makes Bitcoin an excellent investment.

Casey is of the opinion that Bitcoin, and cryptocurrency in general, are more powerful due to their limited supply and lack of central bank control.

He has also joined Bitcoin supporters who claim that the asset is a hedge against inflation. He believes the asset’s value will increase with increased investment. Casey believes:

This type of asset has a huge appeal. Bitcoin’s price will rise even if only a small portion of the US$600 trillion in financial assets is allocated to it.

He said that the possibility of negative interest rates in global markets will further erode bonds worth US$20 trillion and assets linked to cash of US$100 trillion.

Capital Group, with $2.6 trillion of assets under management, joins mainstream institutions to embrace digital currencies. In a recent report, Bank of America stated that cryptocurrency was too big to ignore.

Bitcoin reaches new ATH

Bitcoin’s price has been rising, and it reached a new high on Tuesday, following the launch of the US Bitcoin Exchange Traded Fund. Bitcoin reached $66,000 for first time on Tuesday. By the time of publication, Bitcoin’s price was $63,130. It had been hovering at a level above $60,000 since Friday last week.

Bitcoin’s price surged in anticipation of ETF approval. As previously reported, Bitcoin’s popularity saw the cryptocurrency market register an inflow of $750 billion within just 21 days.

Why Now?

Capital Group, one of the largest asset managers in the world with $2.6 trillion of assets at the end of 2021, waited until 2022 before launching its first exchange traded fund.

What was the reason for their lateness?

Holly Framsted is the Head of ETFs for Capital Group. She says, “The implied reason you’re late implies there’s a race going on.” “It’s not a race for us.”

You could dispute that if you wanted to. Capital Group, after all, has missed out on a $7.2 trillion dollar industry that was in the U.S. by the end of 2021.

Capital Group may be rewarded for its patience. The fund provider is best known for its actively-managed portfolios and has now decided to enter this industry at a time when actively-managed ETFs are exploding.

According to CFRA data “Active ETFs managed just 4% ETF assets, but they gathered 10% in 2021 record inflows,” Todd Rosenbluth says, the head of ETF research and mutual fund research at CFRA, an independent research firm. “There is still a lot of room for growth in these funds, as investors become more comfortable with active management’s tax-efficient approach.”

Capital Group’s entry into ETFs in 2019 was spurred by a crucial regulatory change, when the SEC adopted Rule 6c-11 under the Investment Company Act of 1940. This standardized the way ETFs are launched, easing Capital Group’s and other issuers’ path.

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Framsted explains that when examining the ETF landscape, they considered two factors. The first question is: ‘Can Capital Group package its best in this vehicle? The second question is: “Can we meet the expectations of our clients in this regulatory environment? Can we deliver ETFs that are liquid and tax-efficient?

She said, “It was only after the regulations changed in 2019 did we feel like we could package active management into a structure which would also deliver tax efficiency as well as liquidity.”

It’s not a small thing that one of the largest asset managers in the world is now investing in ETFs.

Rosenbluth: “Capital Group’s entry into ETFs will be a significant milestone for active ETFs, given that it managed $2.6 trillion of assets at the end 2021. It is also one of the world’s largest asset managers.”

SINGAPORE, October 5 (Reuters), – The central bank of Singapore reported that fund managers in Singapore increased their assets under management by 9 percent in 2015 to S$2.6 trillion (1.90 trillion dollars), boosted by the growth in alternative asset sectors.

The central bank reported that the assets under management (AUM), or total assets, of alternative asset managers increased by 29 percent, to S$410billion, while those of traditional asset managers only grew by 4 percent.

In its annual survey of asset manager, the Monetary Authority of Singapore said: “These trends highlight the crossroads that the asset management industry faces. Interest rates have been low for many years and look like they will remain lower for longer.”

As public markets disappoint in their returns, investors seek higher returns on private markets due to illiquidity or credit risk premiums. Managers have been forced to look for new ways to invest capital.

Private equity/venture capital assets under management (AUM) grew by 47 percent, to S$136 Billion, and real estate AUM increased by 80 percent, to S$69 Billion.

MAS reported that the AUM of hedge funds managers grew 11 percent, to S$119 Billion, while REIT managers’ AUM grew 7 percent, to S$85 Billion.

The growth of 9 percent in assets under management by Singapore-based asset managers is slower than in 2014 when assets increased by 30 percent.

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