Holly Frampstead, head of global product at Capital Group, who just got through ringing the one and only closing bell.
Nice to see you.
Thank you for taking the time.
Thank you.
It's great to be here.
What does ringing the bell today mean for Capital Group's ETF business and ultimately, what are you really here to celebrate?
Well, we are here today officially celebrating our 12 Morningstar gold ratings on our actively managed ETFs.
Really, I think this is a testament to the capital system and our unique form of fundamental active management that focuses on long-term perspective. diverse points of view coming together and deep research helping drive those investment decisions.
Of course we're also big fans of Morningstar.
You got additional Morningstar recognition.
What does that look like and what does that mean to you?
Indeed, I think it really is a testament to how we manage money.
When you think about the stock market today, it's incredibly concentrated, in particular in the AI theme, and our ability to break through that noise, bring broader diversity to a portfolio, makes active management suitable at the core of a client's funds.
Capital Group.
Built more on mutual funds.
Why move into ETFs and how are you viewing this new iteration of your work?
Well, active ETFs can be incredibly tax efficient.
So for taxable investors they're a very powerful vehicle.
Historically you only had access to index management or passive management in that wrapper, and now that you can access actively managed investment strategies in the ETF wrapper, investors are now bringing, bringing their money back to active management.
What we find is that ETFs have taken 3%.
Market share from mutual funds in model portfolios across the industry, and 2% points of that are going into actively managed ETFs.
So increasingly financial advisors are demonstrating the value of ETFs and appreciating the value of active combined.
What are you seeing overall in the ecosystem in terms of investor appetite for ETF products?
I've been doing this a long time and just more.
I can't go very many minutes of my day without having an ETF conversation, and understandably so.
Well, investor appetite for ETFs is tremendous.
They've been growing at about a 20% compound annual growth rate.
Importantly though, actively managed ETFs are growing at a roughly 50% compound annual growth rate, so far faster than their passive counterparts, and we think this is a testament to the broadening of exposures available in a vehicle.
Passive investing can still be so dominant to so many portfolios.
What is the case for more active management today, to your point?
Well, some of the risks that we see in the market today are the heavy concentration, in particular in the AI theme and in markets overall.
If you think about the top 10 companies in the S&P 500, represent about 40% of the overall index.
In semiconductors alone in the S&P, it's 20%, and the concentration isn't just a US phenomenon.
If you look globally, MSCI Emerging Markets Index, the top three names account for about 30%.
So that's a tremendous amount of concentration in a single theme.
And we think active managers have a better ability to parse through the market noise, bring broader diversification, and ultimately protect their clients in the event.
A market regime change or disruption.
Holly, as you and I are sitting here, I can look up.
I see all these impressive ticker symbols up here next to Capital Group.
We've got CGXU, CGNG, many others.
If you have people watching the interview, they want to learn more.
They want to become more informed investors.
Where do you recommend they start to be introduced to some of these products?
Well, Capital Group.com is certainly a place to access information on the products, but most importantly, we think you should consult with your financial advisor.
We offer more than 25 ETFs in the US, 29.
Now that are really suitable for the core of a client portfolio and we're expanding globally.
So if you're looking for an exposure to build a more tax efficient asset allocation, we probably have an ETF for that and consult your financial advisor or Capital Group.com.
We had an incredibly enthusiastic closing bell down here today to celebrate you and the markets, and you brought us all-time highs.
Thank you for that as well.
Thank you.
I wish I could say I had anything to do with it.
I'm going to give you the credit.
Why not?
Holly Framstead, head of global products at Capital Group, uh, come back anytime.
It's nice to see you.
Very great to see you too.
