Capital Group, the world’s largest active-only money manager, is stepping into a more high-profile phase, launching a strategic push to expand its private-market offerings and attract retail investors, Bloomberg reports. The $3.3 trillion firm, long known for its low-profile approach and American Funds lineup, is partnering with buyout giant KKR & Co. to offer new funds blending public and private assets, marking one of the most significant strategic shifts in the firm’s nearly century-long history.
The move comes as Capital Group faces declining inflows from equity mutual funds and growing competition from passive index funds, exchange-traded funds, and private-market-focused competitors like Apollo Global Management and Blackstone. CEO Mike Gitlin, who took the helm in 2023, is leading the effort to raise the firm’s profile with retail investors through a combination of marketing campaigns, new ETFs, and the KKR partnership. The collaboration will include the firm’s first target-date fund for retirement plans containing both public and private assets, as well as similar model portfolios for individual investors. Capital Group will also manage some money for KKR’s Global Atlantic insurance arm.
Executives at KKR told Bloomberg that the partnership is designed to bridge the gap between investment opportunities typically reserved for institutions and those accessible to everyday investors. Gitlin emphasized that the alliance allows Capital Group to scale into private markets more efficiently than through acquisitions, while leveraging its established distribution network, which reaches more than 20 million U.S. households and roughly 75% of American financial advisers.
The partnership’s initial funds, Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+, allocate roughly 60% to publicly traded debt and 40% to private credit, including direct loans and asset-backed debt. Two additional funds are planned to incorporate private equity and real assets. Management fees for the new products range from 0.84% to 0.89%, with no performance incentive fee, significantly lower than KKR’s typical fees for high-net-worth offerings.
Capital Group’s shift also involves a cultural adjustment. The firm, known for its discreet, idiosyncratic environment and long-tenured portfolio managers, is embracing marketing campaigns and social media engagement, including hot-air balloon advertising in Germany, pickleball events in California, and Gitlin hosting podcasts and posting publicly about personal pursuits like training for a half-marathon.
Industry observers note that private markets represent a natural growth frontier for active managers like Capital Group, as traditional mutual fund inflows have slowed over the past decade. Bloomberg reports that two new KKR-linked funds already manage more than $500 million in assets, highlighting early traction for the strategy. Experts say the firm’s success in blending public and private strategies and leveraging its deep retail distribution could position Capital Group as a leading player in the evolving asset management landscape.
James St. Aubin, chief investment officer at Ocean Park Asset Management, told Bloomberg that Capital Group must evolve beyond its traditional offerings to maintain assets under management, describing the private-market push as a potential “identity shift” for the firm. The next phase for Capital Group will test whether its legacy of performance and adviser relationships can translate into success in the increasingly competitive and complex world of retail private-market investing.
