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Long-term investing: why it matters



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 Capital Group

Investment isn’t all about momentum, high risk and high maintenance. Capital Group’s long-term perspective and unique multi-manager system have resulted in better results for clients, explains Marnix van den Berge, Benelux & Nordics Financial Intermediaries Sales Managing Director, Capital Group.

What makes Capital Group different from other managers?

Wholly investment-led and primarily employee-owned, Capital Group is a private company whose shareholders also invest in Capital Group’s funds and strategies. Portfolio managers are not compensated based on the assets they manage but rather on the long-term investment results they deliver for clients. Under the Capital SystemSM, all portfolios have a multi-layered governance structure with multiple portfolio managers each managing a portion of the same strategy, allowing them to act on their highest convictions and leading to natural diversification. Capital Group offers 45 strategies globally and manage US$ 2.4 trillion in assets. Bottom-up and fundamental research is how we get results for our clients.

What does “long term” mean at Capital Group?

Established in the US in 1931, the firm’s long-term approach penetrates all levels of the organization and there is a strong sense of being committed to markets: there’s no coming and going. We set up our first office in Europe in Geneva in 1962, with a long-term goal to invest globally. We launched our first Luxembourg-domiciled fund in 1969 and started operations in London in 1979. In 2013, we expanded our local commitment abroad by opening local offices and now operate at 11 markets, with a further five-year strategic expansion plan for Europe and Asia underway.

Rather than the standard approach of looking at the calendar year, we look through volatility by remunerating, monitoring and evaluating our portfolio managers at 8-, 5-, 3- and 1-year intervals. We have some of the most experienced investment professionals in the industry: our portfolio managers have an average of 27 years of investment experience and 21 with Capital Group. Their long tenure allows them to concentrate on what they are good at and portfolio management, which is crucial in generating good results for their clients.

What does it mean to be an “active manager” today?

As one of the world’s largest active asset managers, one of our competitive edges is the scale and scope of our proprietary research effort, with around 250 analysts performing bottom-up security analysis in a global team of investment professionals of around 400 people. It is all about staying in the market, being committed, and looking through the volatility because markets are irrational. If we believe a company is solid, has good management and a unique position in the market, we remain invested for a long time. As the average holding period of positions in our strategies is about 8 years, our investment approaches are not affected by short-term volatility of a few months, where some people may make decisions that they later regret. Throughout Capital Group’s 90 years of history, we’ve shown that active management has provided clients with good returns over the long term. This is also what makes Capital Group different.

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