Capital Group's 'Acorns To Oaks' ETF Targets Small, Mid-Cap Growth

While U.S. ETFs collectively manage over $10 trillion in assets, only about $440 billion is allocated to small- and mid-cap holdings, according to Todd Sohn, ETF strategist at Strategas, as reported by Reuters.

"This is still a space within the ETF area that is full of opportunities," Sohn says. Tapping into this potential, Capital Group introduced the Capital Group U.S. Small and Mid Cap ETF CGMM on Jan. 16.

This marks Capital Group's first foray into small- and mid-cap active ETFs, addressing what the firm identifies as strong demand among financial advisors for active exposure to this market segment. The actively managed ETF seeks long-term capital appreciation by investing in small- and mid-cap American companies with market capitalizations of up to $10 billion. The fund's expense ratio is 0.51%.

A look into Capital Group's website shows us that the new ETF will pinpoint "acorns to oaks"—companies with the potential for long-term compounding.

Also Read: ETFs In 2025: Fee Wars, Crypto Booms, And The Risks Ahead

Expanding ETF Model Portfolios

In addition to launching CGMM, Capital Group plans to integrate the new ETF into a model portfolio offering later in the first quarter. These models, which have seen success with the firm's mutual funds, are being extended to include ETFs in response to increasing investor demand. "We believe ETF models will be the next driver of exponential growth across the industry," Davis noted.

Capital Group's ETF lineup now includes 22 active funds with approximately $50 billion in assets under management. Among these, the Capital Group Dividend Value ETF CGDV is a standout, boasting over $12 billion in assets.

Read Next:

• Qualcomm's China Tailwind: Analyst Sees Positives That ‘Overwhelm' Apple Concerns

Photo: Shutterstock