A brief history of The Capital Group Companies

The roots of The Capital Group Companies organization were planted back in 1931. The stock market crash of 1929 had left many investors almost penniless, and the country was still embroiled in the worst depression in American history. Widespread pessimism over the future of business hovered like a black cloud. Meanwhile, more than 40% of the banks had closed and one out of every four Americans was out of work.

Capital’s founder, Jonathan Bell Lovelace, emerged almost unscathed from the market crash and subsequent depression. During the Roaring ’20s, JBL (as he came to be called within the organization) had spent much of his time at the investment banking and brokerage firm of E. E. MacCrone & Company in Detroit. It was there that he developed his investment research techniques and earned a reputation for achieving impressive investment results. By 1929 he could see no logical relationship between stock market prices and their underlying values.

Unable to convince his associates at MacCrone that there was a risk of a major downturn, JBL sold his 10% interest and withdrew from the firm in the summer of 1929. He left Detroit and liquidated most of his personal stock investments well before the worst of the market losses occurred.

 JBL moved to California and within two years reentered the financial world. This time it was through his own business.

In 1932, a year after JBL founded the organization, trustees of a closed-end investment trust called The Investment Company of America (ICA) approached him to help reorganize the trust, which he had helped to form in 1926 while at MacCrone. It was a complicated situation, but after extended discussions, JBL agreed and the reorganized ICA began operations in December 1933 under his leadership. In 1939 shareholders approved turning the trust into an open-end mutual fund. Today, ICA is one of the largest and most successful mutual funds in the world—and  flagship of the American Funds family.  

In 1953, Capital was one of the first U.S.-based investment firms to invest outside of North America. It opened an office in Geneva a few years later. In 1967, the Capital Group began investing money for large institutions, starting with General Mills. Capital Group Private Client Services was launched in 1974 to serve high-net-worth investors, along with a select group of foundations and endowments. Capital was appointed by the World Bank to manage the first emerging markets equity fund in 1986.

The small company JBL founded nearly 80 years ago has grown into a thriving global complex with some 7,500 associates. Today, The Capital Group Companies is one of the largest and most respected investment management firms in the world.

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