One Capital Group manager’s recently announced retirement from two strategies led to different results for those funds’ Morningstar Analyst Ratings. Why would the same manager stepping away from a firm known for handling successions well have diverging effects on different funds? Well, the details matter.
Capital Group’s multimanager approach usually keeps its strategies from depending too much on any one manager and protects them from sudden changes. That was the case at Capital Group Global Equity. Sometimes, however, a departing manager runs a large share and leaves a big hole to fill. This was the story for Capital Group Canadian Focused Equity. Here are the details on the changes at these two funds and how they affected their respective People Pillar scores, which make up a big part of their overall Medalist Ratings.
Capital Group Global Equity
This C$13.6 billion fund’s team will increase from five to six managers as a result of a recent change. Capital Group announced this month that Jeremy Burge, a manager since May 2019 with 22 years of firm and 42 years of industry experience, will step off the fund on July 1 and retire in September. Two new managers, Georgios Damtsas and David Penner, will join the team in April before he leaves. Damtsas and Penner each have more than a decade of experience. Carl Kawaja, Leo Hee, Dawid Justus, and Emme Kozloff also remain to absorb Burge’s share of the strategy’s assets.
This is a good example of how Capital Group insulates its strategies from manager changes. Its preference for large teams running independent sleeves of its funds limited the impact of Burge’s retirement. Additionally, its practice of staggering manager start dates and announcing changes months in advance prepared the fund for his departure. Because of this, the fund’s People Pillar score of Above Average and its overall Medalist Rating did not change.
Capital Group Canadian Focused Equity
Meanwhile, Capital Group Canadian Focused Equity’s management team will shrink from four to three after Burge leaves this fund on Aug. 1. Burge has managed a sizable portion of the portfolio since June 2011 and could claim responsibility for much of the fund’s long-term results. He ran 38% of the fund’s assets as of December 2024.
Not only will a lot of the portfolio change hands when Burge leaves, but the fund will lose his four decades of experience. The three remaining managers are not inexperienced and can lean on Capital Group’s deep analyst pool, but they have shorter tenures at the fund. Each joined in the last four years—Anirudh Samsi in 2021, Jason Smith in 2022, and Matt Hochstetler in 2024—and the firm doesn’t expect to appoint any other new managers.
Because of all this, Burge’s departure is a bigger loss for this portfolio than for Capital Group Global Equity. Morningstar downgraded the fund’s People Pillar score to Average from Above Average, which pushed its Medalist Rating from Bronze to Neutral.
A firm’s process and reputation for coping with manager successions matters, but sometimes a departing manager leaves shoes that are challenging to fill. Burge ran a smaller slice of Capital Group Global Equity, where a large team of seasoned managers remain. He was responsible for a larger share of Capital Group Canadian Focused Equity’s assets and historical record, which he’ll leave in the hands of fewer, less-experienced managers. It will take time for that team to prove they can repeat the strategy’s past success.
This article was generated with the help of artificial intelligence and reviewed by Morningstar editors.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
