Capital Group ETFs to be included in new SEI model portfolios


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Capital Group’s recently launched suite of exchange-traded funds will be included in a new batch of model portfolios that combine ETFs with mutual funds from the asset manager’s American Funds subsidiary.

The so-called hybrid models, available on SEI, a service provider for financial companies, include F-3 share classes of some of the company’s largest municipal bond funds, including its investment fund. $26.6 billion tax-exempt bonds, $10 billion American High-Income Municipal Bond Funds and $1.6 billion American Funds Short-Term Tax-Exempt Bond Fund, a Capital spokesperson said. Group.

Some of the models also include shares of the $1.3 billion Emerging Markets Bond Fund and the $71.6 billion Global Fund of U.S. Small Cap Funds, she noted.

The models also include an assortment of Capital Group’s six ETFs, the spokesperson said.

This article was previously published by Ignites, a title owned by the FT Group.

ETFs aren’t currently in other models, she said.

The ETFs, which launched in February, had $835 million in assets as of April 30, according to Morningstar Direct.

The ETF lineup is made up of five equity ETFs and a fixed income offering, the company’s spokesperson said. When they debuted, a company executive said she expected clients to eventually be able to use the ETFs in model portfolios.

“When you look at this hybrid format, we’re looking to bring the best of ETFs and their tax advantages to market,” said J. Womack, general manager of product line and personalization for SEI’s advisory business.

ETFs tend to be more tax efficient in the United States than mutual funds due to the way stocks are bought and sold. The company launched the models in response to customer demand for tax-efficient packaging for both investment vehicles, Womack said.

The dozen new SEI model portfolios serve different purposes across the risk-return spectrum, Womack said. There are conservative and moderate growth portfolios, as well as US and non-US fixed income and equity models.

Although ETFs are “inherently more tax-efficient than mutual funds,” he said, “mutual funds offer that broad spectrum that Capital Group offers and investors are familiar with.”

He did not comment further on the tax implications of each strategy.

SEI’s models will be among the first to combine tax strategies for mutual funds and ETFs into a single service, Womack said. “We are the first provider to offer it at scale,” he said.

The strategies will be available to investors on SEI’s wealth management platform, the announcement notes.

Across the industry, 54% of assets advised are in model portfolios, according to a February report from Broadridge. ETF issuers and strategists have responded to this demand by rolling out over 500 model portfolios between 2018 and 2021.

“We believe the ETF vehicle can provide strong active management at the heart of a portfolio and help investors achieve their financial goals,” Holly Framsted, head of ETFs at Capital Group, wrote in an email.

Capital Group’s strong feedback history will ensure new models are well-founded and well-received, she said.

SEI launched its first model with American Funds mutual funds in 2020, the announcement notes. The company may eventually offer more models that include Capital Group ETFs, Womack said.

The models have “comprehensive solutions for both qualified and unqualified accounts,” he said. “And we expect a high level of adoption by advisors.”

*Ignites is an information service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at

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