Mutual fund parent Capital Group to cut 9% of its workforce
Los Angeles-based Capital Group Cos., parent of the American Funds mutual fund group, plans to cut about 9% of its global workforce this month in its second round of layoffs this year.
The company, one of the world’s biggest asset managers, told employees this week that 820 jobs would be lost out of a total of about 9,000, spokesman Chuck Freadhoff said.
Like many money managers, Capital Group has been shrinking staff as assets have dived with the stock market’s plunge over the last 18 months. The firm, known for its conservative, “value”-oriented investing style, manages $850 billion in stocks and bonds, down from a peak of $1.2 trillion.
Fund companies charge management fees as a percentage of assets. So as the market value of their investments has plunged, and as some investors have pulled money out, fee income also has slumped.
Although jobs are disappearing across the financial industry, Capital Group’s unprecedented staff cuts are a heavy blow to the firm’s self-starter culture. The company slashed about 500 jobs in January, and in March gave advance warning about the layoffs announced this week.
The new cuts will be across nearly all departments, Freadhoff said. But as with the January layoffs, the firm said none of its portfolio managers or analysts would lose their jobs. The long tenure of the 80-year-old company’s investment management staff has always been one of Capital Group’s selling points with investors and financial advisors.
Capital Group employs more than 2,500 people in the Southland, including its downtown L.A. headquarters staff and its account servicing staff in Orange County.
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