Capital Group celebrates the second anniversary of the opening of its Miami office, dedicated to U.S. offshore and Latin American clients, led by Mario González, the firm’s director for the Iberian Peninsula, the U.S. offshore segment, and Latin America. During this period, business volume — which includes the offshore segment itself, as well as Latin America, Asia, and the UCITS business for non-resident investors in Europe — has grown significantly. The team has also expanded, strengthening coverage in key U.S. markets such as Texas, California, and New York. “Many of our competitors have either invested in this market or are resorting to different distribution models. What we have done is reinvest in the market, with greater commitments and more resources,” says González.
Now, the next challenge is to expand Capital Group’s sales network across the American continent. Funds Society sat down with González and Guy Henriques, the firm’s president for Europe and Asia, to discuss their plans, within the investment philosophy of a very long-term horizon that the company has demonstrated throughout its more than 90-year history. At this point, Henriques sends a strong message about Capital Group’s intentions: “We have always grown organically. We are a private company and have a very long-term vision of how to build our business.”
After the spectacular growth of the Miami office since its opening in 2024, what are the next steps?
The next phase of growth is in Latin America. We are looking to establish long-term relationships with the right distributors, always with a long-term vision and seeking partners within those markets for whom we can add more value. Our strategy will focus on Mexico as a priority market, as well as Chile and Colombia, and the good news is that we will have a team providing support from Miami and New York.
We find that structurally Mexico is very attractive, especially the institutional business. The demographic profile is very strong, and it is a very consolidated market, with a robust base of professional investors that is growing because the country is growing. Holding periods are very long-term, and that is where we can help from the perspective of an active manager, also with our knowledge-transfer philosophy. We have decades of experience in portfolio construction and risk management and are among the largest providers of target-date funds in the U.S.
In Chile and Colombia there is some volatility because they are carrying out reforms to their pension systems, so we still need to wait and see what results they produce, but they could structurally become very attractive markets. In these cases, we are talking about establishing traditional indices in line with the structures of target-date funds. And that will improve, for example, aspects such as holding periods, which will lengthen.
Brazil’s case is a bit different; it is more of a strategic objective. It is unusual due to the structure of its risk-free rate, which means that the investment horizon is very different and risk appetite as well. We are talking with some potential partners to establish strategic alliances with them. We do not want to have people on the ground everywhere. We focus on building our presence where it makes sense.
Capital Group has maintained a very controlled product range for years, but more recently has begun to introduce new developments, such as active ETFs. Where is the firm’s product innovation heading?
We have mainly two areas of innovation. The first is our own investment process, which we have developed since the 1950s but which remains very innovative. It is our modular portfolio system, in which we have many managers managing their own module within a portfolio, where they put their highest-conviction ideas.
In addition, a certain percentage of our funds — not all, but most — also has an allocation that we call the ‘research portfolio’ with the best investment ideas from our analysts, because at Capital Group it is common for analysts to manage money from a very early stage and to be as senior as the managers themselves, so they not only have to make recommendations — which they do — they also have to invest.
Therefore, our investment process is innovative in itself, and in constant evolution.
The other area of innovation has to do with our approach that it is necessary to provide clients with a vehicle of their choice. It can be an ETF, an Act 40 fund, a UCITS fund… In the Americas, obviously, the market has changed and now investors can use more types of vehicles. ETFs are a good example. We have been working over the last six years to lay the foundations on which we can provide the same service outside the U.S. that we provide in the U.S. This has included expanding our UCITS range and increasing the number of segregated portfolios, including a great deal of customization that we did not previously offer. We do not see it as innovation for the sake of innovation, but as a natural evolution of our business in response to the way clients want to work with us.
What interest are offshore and LatAm investors showing in ETFs?
We have seen more interest from institutional clients in Mexico following a regulatory change in the country. For us it is a great opportunity and we believe we can help, not only with the product but also on the educational side. We can provide all our knowledge about these vehicles, regarding scale, trading, and the risk process. We can also transfer that knowledge in Chile and Colombia.
More broadly, the structure of active ETFs offers investors an efficient way to access our strategies and the underlying investment advantages. In addition, it allows us to apply our expertise in portfolio construction, trading, and risk management consistently across all regions, thus meeting client demand in Europe and Asia.
In general, we believe that ETFs will become an increasingly important part of asset management globally, and we expect to be part of that evolution. In the U.S., we are currently among the asset managers with the highest organic growth, with around $120 billion in active ETFs, reflecting strong client demand for this type of structure.
Speaking of the vehicle of choice, you have also launched very innovative solutions together with KKR to enter the private assets market.
I think we have been pioneers in bringing hybrid funds to market. Clients want to have private assets in their portfolios, and that is becoming a normal allocation. We wanted to provide private assets for our clients’ portfolios, and we like to think that our strategies can be the ‘core’ of a portfolio, but when we looked at how to approach private markets and how to provide the best for our clients, we came to the conclusion that it would take us a long time to develop the right capabilities on our own, so we analyzed the leading managers in the private space and ended up partnering with KKR because we consider that they have a very similar culture to ours.
