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"We build our business together with our clients"

Arne Tölsner
Head Client Group DACH, Capital Group

 

Mr. Toelsner you CEO, Mike Gitlin, recently announced a growth strategy for Europe and Asia: how are you implementing this in Switzerland?

Switzerland is a key market within our Europe and Asia strategy, and our approach is clearly partnership-focused. Today, clients are increasingly seeking fewer but deeper relationships with managers who support them not only through investment performance but also with the broader challenges they face. Our focus in Switzerland is therefore on deepening these partnerships over the long term: through greater engagement, investment in our local presence and ensuring that clients can access our strategies in a form that is relevant to them. One example of how we build such partnership-based relationships is Capital Learning – a training institute run by Capital Group that we offer to our partners to provide product-neutral training for their advisers. In doing so, we help our clients to actively develop their business. In Switzerland, too, we have just recruited an experienced trainer who will join our Zurich office on 1 July. As a private, long-term investor, we do not pursue growth for growth’s sake. We build our business together with our clients – we support their long-term goals with consistent, research-based investment solutions and, in addition, create added value through analysis, training and ongoing dialogue. In practice, this means being present, consistent and aligned with our clients’ interests – not only in the way we invest, but also in how we support clients through different market phases.

Capital Group is regarded as an ‘old-school active investment manager’, at a time when active asset management is under pressure. How is Capital Group responding to the structural changes in the industry?

That depends on what is meant by ‘old-school’. If it means that we focus on long-term, research-driven investing – then yes, that is quite deliberately our identity. But that does not mean we are backward-looking. On the contrary: it is precisely this long-term focus that allows us to look further ahead than most. For some time now, we have been closely examining what we regard as a profound realignment of the global economy – spanning geopolitics, supply chains, technology and capital markets – and what this means for investors over the next 10 to 15 years. This perspective shapes our investment decisions as well as our understanding of evolving client needs.
Our task is to guide clients through this transformation with clarity and discipline – not by reacting to short-term developments, but by building portfolios that capitalise on emerging opportunities and can withstand different market phases. Active management has always been most relevant during periods of change and volatility. And the more complex the investment environment becomes, the more compelling we believe the case is for thoughtful, research-driven active investing – in the long term.

One of your hallmarks and unique selling points is the so-called Capital System: is this multi-portfolio management system still relevant today?

Absolutely – in fact, we would argue that it is more relevant today than ever before. The Capital System forms the basis of our day-to-day investment work. It brings together the most compelling ideas from several experienced portfolio managers into a single portfolio. Each manager invests for the long term, supported by in-depth global research, and we combine these different perspectives to create portfolios that are both highly conviction-driven and well-diversified. This results in a fundamentally different model. There are no star managers or reliance on key individuals – instead, the system offers continuity of approach, diversity of thought and a more resilient decision-making process that is embedded within the portfolio itself. This also promotes consistency: lower turnover, long track records and the ability to manage capital over time and on a large scale. In an environment characterised by increasing complexity and dispersion, this combination is particularly valuable. We do not rely on a single viewpoint, but draw on several independent perspectives with shared responsibility – which helps to reduce biases and manage risks more effectively. Ultimately, the goal is simple: to achieve consistently strong, long-term results for clients. The Capital System is the framework that enables us to do this consistently across different market phases.

What role do ETFs play in Capital Group’s strategy today?

Fundamentally, we are seeing a shift in how clients express their active investment views – across a growing range of investment vehicles. Our task is to meet this demand without altering our underlying investment philosophy. ETFs are part of this trend. They are simply a vehicle – not a change in our investment approach. In the US and Canada, we are seeing that active ETFs are increasingly becoming the preferred investment vehicle for investors. We launched our first active ETFs in the US in 2022. Our portfolio of 25 active ETFs in the US is recording the strongest organic growth in the market – in just over three years, we have reached a volume of nearly $140 billion. For us, the accessibility of our core, research-driven capabilities is a priority – in a form that best suits our clients. We are constantly reviewing how we can best implement this in different markets, guided by client needs and our long-term approach.

Where will active management deliver the greatest added value in ten years’ time – and where will it lose significance structurally?

The role of active management over the next decade will be shaped by how the markets evolve. With the growth of passive ownership, markets have become more concentrated and, in the short term, are at times less focused on fundamentals. This restricts price discovery in parts of the market – but also opens up more opportunities for investors with a long-term, fundamental perspective. In our view, active management delivers the greatest value during periods of market turbulence – when markets are tight, expensive or driven by short-term noise. In such environments, the ability to take a step back, assess valuations and adopt a multi-year perspective becomes crucial. At the same time, there will always be areas where investors simply seek broad, low-cost market exposure – that is where passive investing has its place. Ultimately, it is not a question of choosing one or the other, but of how the two can be meaningfully combined. We are convinced that fundamentals drive returns over the long term – and that is precisely where the advantage of a disciplined, research-driven active approach lies.

Capital Group has entered into a strategic partnership with KKR in the private markets sector: how does this collaboration work?

Our partnership with KKR is based on a clear client need – not on a shift in our philosophy. We remain convinced that public markets form the core of long-term portfolios, thanks to their transparency, flexibility and proven track record. Private markets can play a valuable complementary role by broadening the investment universe and enhancing diversification. Together with KKR, we are combining our respective strengths to develop holistic solutions that thoughtfully combine public and private investments – helping clients build more resilient and balanced portfolios over the long term. Crucially, we are now making this approach available to professional and qualified investors in Switzerland – and can thus offer it across the entire region for the first time. Against this backdrop, we have launched the Capital Group KKR Global Multi-Sector+ (GMS+), a credit strategy that combines public and private markets: It combines our expertise in listed markets with KKR’s private credit capabilities in a single solution – thereby providing access to diverse sources of return whilst offering greater liquidity than is typically available in the private markets.

Switzerland is a global asset management hub. In your view, what needs to improve to encourage international firms such as Capital Group to invest more heavily here?

Switzerland remains one of the leading global centres for asset management, with a strong foundation of talent, stability and international connections. Ultimately, the key is to create an environment that enables companies to invest for the long term – in people, in skills and, above all, in client relationships. fWe came to Switzerland to stay. Geneva was our first office outside the US over 60 years ago. It was here that we developed the precursors to today’s MSCI indices. These deep-rooted ties are also reflected in our business: we have been growing strongly for years, both with financial intermediaries and institutional clients. We feel very much at home here and see Switzerland as a core market in which we intend to continue investing.