In addition to the balanced fund, the other two ETFs Capital Group on Tuesdayfiled to offer were the Capital Group World Dividend Growers ETF and the Capital Group International Equity ETF.
"They were a later entrant into the ETF marketplace, roughly 30 years after the first products," Todd Rosenbluth, head of research at VettaFi, a data and analytics provider, said of Capital Group. "But they've very quickly established themselves as a key asset manager to watch."
What's interesting about the Capital Group Core Balanced ETF is that while balanced or asset allocation mutual funds are commonly used within retirement plans such as 401(k)s, when it comes to the ETF space, similarly focused products have struggled to attract assets, Mr. Rosenbluth said. At the end of March, asset allocation ETFs had just $16 billion in total assets, he said.
"That's 0.2% of the $6.8 trillion in U.S.-listed ETFs," he said, citing BlackRock's $1.36 billion iShares Core Moderate Allocation ETF and State Street Global Advisors' $226.9 million SPDR SSGA Global Allocation ETF as two examples of such funds that came to mind.
Capital Group obviously sees opportunity in what currently is a "very small slice of the ETF pie," Mr. Rosenbluth said, adding that if Capital Group is successful it could spur broader demand for balanced ETFs from other providers.
In pursuit of its investment objective, the Capital Group Core Balanced ETF will vary its mix of direct or indirect exposure to "equity securities, debt securities and money market instruments (debt securities maturing in one year or less) and cash," a filing pertaining to the fund said.
"Since we first launched our initial suite of ETFs in early 2022, our focus has been on offering active, transparent strategies that can serve as core building blocks in investor portfolios and that continues to be the case with these three new funds," said Scott Davis, director of ETFs at Capital Group, in a statement. "Every ETF we bring to market solves for a problem or a need we have heard directly from advisors."
Mr. Davis said Capital Group is particularly excited about bringing the Capital Group Core Balanced ETF to market, which he referred to by the ticker symbol CGBL.
"We have a long track record of expertise in multi-asset investment management with our mutual funds, and we are confident CGBL will fill an important gap in the ETF landscape while serving as a core solution within investment portfolios," he said.
Capital Group is tapping into growing investor interest in actively managed ETFs, "and it's still early days for the active ETF marketplace," Mr. Rosenbluth said.
"They seem to be bringing investors into the ETF marketplace with their products as opposed to necessarily taking market share," he said. "That's a win for everybody."
Capital Group had about $2.2 trillion in total assets under management as of Dec. 31.
