Brand recognition target for Capital Group
Capital Group, the $1.2trn US asset manager, says its private wealth business is growing across Europe, even as it seeks to build up its brand recognition as a key part of its business development strategy for the region.
Capital Group may be one of the biggest asset managers people have never heard of – at least in European markets and among certain types of investors.
That is the view expressed by Simon Levell (pictured above), vice president at Capital International Limited, and his colleague Grant Leon, head of Private Wealth Sales who are engaged in the European branding push of Capital Group out of its London office.
To re-cap, this is a business with some $1.2trn under management, of which some $1trn is onshore mutual funds business in the US. The company was founded in 1931 in Los Angeles.
But Capital Group (CG) also has a long history in Europe, setting up its Geneva presence a half a century ago, and its London presence some thirty years ago.
“Historically most of the business outside the US has been institutionally focused, but more recently there has been a strategic move at Capital Group to in increase the level of focus we have on the private distribution space. So, talking to fund buyers, whether they be part of a bank or an insurance company or a financial adviser, here in the UK and in Europe,” says Leon (pictured below).
Part of this strategic move includes a focus on the distribution of CG’s Luxembourg funds via financial advisers, Leon adds. This includes recruitment of people for the UK market and probably the Swiss market for private wealth distribution. There will also be more resource going into existing offices, or, where there is no existing office in place, they will be seeking to boost the presence. For example, earlier this year CG opened up a Milan office, with dedicated resource to cover the mainly large banks located there.
The long-established Geneva presence has now been complemented within the Swiss market by a presence in Zurich, with Milan serving the Italian speaking parts of the country.
Interestingly, however, Levell notes that markets in southern Europe, such as Spain and Italy, are already seeing growing private wealth sales, despite meeting people still who have not come across the brand or the story behind it previously. Building the brand is a key third pillar of the business development strategy, Levell and Leon say.
Part of the message is that CG is focused on more traditional long only portfolio management, taking a bottom-up approach, with a focused range on offer. Levell says the manager does not use leverage, and generally does not look to derivatives, although there may be some interest rate swaps in some of the fixed income products.
“We think of risk as the permanent risk of losing money,” Levell says.
“We do not define losses or risk as one number. It is about fundamental research- understanding the business risks facing any given company or sovereign you are investing in – then about about having risk control throughout the process, rather than a risk committee at the end.”
CG also looks to controlling risk by not relying on a ‘star manager’ approach, with, for example, elements of portfolios run by different managers, thus reducing succession risk.
CG believes that its investment approach and products will address key needs being identified across Europe, such as strategies that can deliver income, stable growth, and/or low volatility. CG does not outsource any of its investment management, and currently offers some 19 sub-funds via the Luxembourg Sicav structure. The roughly $1trn under management in the US is split across just 33 funds, Leon notes: “We are not into product proliferation.”
Advertising should not, however, be expected on busses: Levell says that the objective is to make sure more people in the professional buying community become aware of what the company does.
“We have a strong brand but low recognition,” he says.
“Those that know us know our strength, but most people don’t know about it.”
But, for those looking for independent managers, which can claim a long term history of business stability, then it ought to come across well, Levell adds.