Capital Group adds 3 new strategies to actively managed ETFs
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Capital Group has unveiled plans to bolster its actively managed exchange traded funds with the addition of three new strategies, just months after entering the ETF space for the first time, a regulatory filing shows.
The company launched its first suite of six active ETFs on the New York Stock Exchange in February and plans to add to the range with three new strategies: Capital Group Municipal Income ETF, Capital Group US Multi-Sector Income ETF and Capital Group Short Duration Income ETF.
The forthcoming Capital Group Municipal Income ETF will aim to provide a high level of income that is exempt from regular federal income tax by investing in a portfolio of municipal bonds, including at least 65 per cent in securities rated BBB-/Baa3 or better.
Capital Group US Multi-Sector Income ETF, meanwhile, will target a high level of income with some capital appreciation by investing predominantly in US bonds rated BB+/Baa1 or below, including non-rated “junk bonds.”
The managers will typically invest in high-yield corporate debt, investment-grade corporate debt and securitised debt, but may also invest in other sectors, such as US government debt, municipal debt and non-corporate credit. It is also non-diversified and may invest in fewer issuers than other strategies.
The Capital Group Short Duration Income ETF will invest in short-duration assets to provide income and capital preservation, through a non-diversified portfolio of US dollar-denominated bonds, debt securities and money market instruments rated BBB-/Baa3 or higher. The average duration of the portfolio is generally expected to be less than two years, but may be up to three years.
Capital Group Core Plus Income ETF has grown to $260mn in assets since launching in February, Morningstar Direct data shows.
The other ETFs that launched in February include the $209mn Capital Group Core Equity ETF, the $443.8mn Capital Group Dividend Value ETF, the $292.4mn Capital Group Global Growth Equity ETF, the $429.3mn Capital Group Growth ETF, and the $264.5mn Capital Group International Focus Eq ETF.
Demand for active ETFs has continued to increase in 2022 with net inflows of $43.4bn during the first four months of the year, according to the most recently available data from ETFGI. However, appetite for active fixed-income ETFs has halved, with $12.8bn in inflows during the first four months of this year, compared to $25.6bn during the same period last year.
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