Capital Group enhances multi-asset shelf with blended target-date series

Capital Group is looking to extend its appeal to the retirement plan industry with a new suite of target-date solutions.

Building on its decades-long record as one of the largest active investment managers globally, the firm announced the launch of its new Target Date Retirement Blend Series. By blending the firm’s active management expertise with passive exposures from BlackRock and State Street, it offers a diversified investment solution for retirement planning.

As of June 2024, Capital Group manages more than $2.7 trillion in equity and fixed income assets globally.

Fundamentally, the firm's new strategy is designed for larger retirement plans and operates as a collective investment trust series, with Capital Group overseeing both active management and passive indexing components as the glide path manager. Passive exposures will be integrated through a combination of CITs and exchange-ETFs, according to the firm.

“We’re aware that plan sponsors have a range of preferences for either active or passive management in their portfolios, or a combination of both, and may also differ in their prioritization of fees versus potential excess returns,” Kelly Campbell, multi-asset solutions lead at Capital Group, said in a statement.

The firm believes the blend of active and passive strategies will appeal to a broader range of plan sponsors, Campbell said, emphasizing how the new series allows Capital Group to leverage its research and multi-asset solutions team to serve bigger institutional investors.

"Introducing a blended target date strategy alongside our all-active series enables us to engage a broader spectrum of plan sponsors and participants," she said.

The series is guided by several principles, including dynamic adjustments of equity and fixed income holdings to meet evolving retirement objectives and the use of flexible active strategies to navigate changing market conditions.

Passive allocations will be incorporated to provide diversified exposure across market caps and geographies, while potentially lowering costs. Capital Group is looking to follow a glide path stretching to roughly 30 years post-retirement, addressing longevity risk with a focus on preserving capital and generating income.

“As one of the active managers with some of the lowest cost active management fees, plan sponsors and consultants were asking us to leverage our strong target date capabilities to bring more choice to the market, including developing a blended strategy,” Campbell noted.