The boards of Capital
Group Conservative Equity ETF, Capital Group Growth ETF, Capital Group Global
Equity ETF, Capital Group Global Growth Equity ETF,
Capital Group International Core Equity ETF, Capital Group International Focus
Equity ETF, Capital Group International Equity ETF, Capital
Group Core Equity ETF, Capital Group Dividend Value ETF, Capital Group Dividend
Growers ETF and Capital Group New Geography Equity
ETF have approved the continuation of each fund’s Investment Advisory and
Service Agreement (the “agreement”) with
Capital Research and Management Company (“CRMC”) for an additional one-year term
through July 31, 2026. The board approved the
agreement following the recommendation of each fund’s Contracts Committee (the
“committee”), which is composed of all of
each fund’s independent board members. The board and the committee determined in
the exercise of their business judgment that each
fund’s contractual fee rate was fair and reasonable in relation to the services
provided, and that approving the agreement was in the
best interests of each fund and its shareholders.
In reaching this
decision, the board and the committee took into account their interactions with
CRMC in addition to information furnished to them
throughout the year and otherwise provided to them, as well as information
prepared specifically in connection with their review of the
agreement, and they were advised by their independent counsel with respect to
the matters considered. They considered the
following factors, among others, but did not identify any single issue or
particular piece of information that, in isolation, was the controlling
factor, and each board and committee member did not necessarily attribute the
same weight to each factor.
1.
Nature, extent and quality of services
The board and the
committee considered the depth and quality of CRMC’s investment management
process, including its global research
capabilities; the experience, capability and integrity of its senior management
and other personnel; the low turnover rates of its key personnel; the
overall financial strength and stability of CRMC and the Capital Group
organization; the resources and systems CRMC devotes to investment
management (the manner in which each fund’s assets are managed, including
liquidity management), financial, investment
operations, compliance, trading, proxy voting, and other services; and the
ongoing evolution of CRMC’s organizational structure designed to
maintain and strengthen these qualities. The board and the committee also
considered the nature, extent and quality of
administrative services provided by CRMC to each fund under the agreement and
other agreements. The board and the committee considered
the risks assumed by CRMC in providing services to each fund, including
operational, business, financial, reputational,
regulatory and litigation risks. The board and the committee concluded that the
nature, extent and quality of the services provided by CRMC have
benefited and should continue to benefit each fund and its
shareholders.
2.
Investment results
The board and the
committee considered the investment results of each fund in light of its
objective and strategy. They compared each fund’s investment
results with those of other funds (including funds that currently form the basis
of the Lipper index for the category in which each fund is
included) and data such as publicly disclosed benchmarks, including applicable
market and fund indexes over various periods (including
the fund’s lifetime) through December 31, 2024 while recognizing the fund’s
short operational history. On the basis of this evaluation and
the board’s and the committee’s ongoing review of investment operations and
results, and considering the relative market conditions
during certain reporting periods, the board and the committee concluded that
each fund’s investment results have been satisfactory for
renewal of the agreement, and that CRMC’s continued management should benefit
each fund and its shareholders.
3.
Advisory fees and total expenses
The board and the
committee compared the advisory fees and total expense levels of each fund to
those of other relevant funds, noting that each fund has a
unitary fee structure. They observed that each fund’s advisory fees and expenses
are competitive with, and compared favorably
to, those of other similar active exchange-traded funds and institutional share
classes for comparable open-end funds included in the
applicable Lipper categories. The board and the committee also reviewed
information regarding the effective advisory fees charged
to other funds and accounts managed by CRMC and its affiliates. They noted that,
to the extent there were differences between
the advisory fees paid by each fund and the advisory fees paid by those clients,
the differences appropriately reflected the
investment, operational, regulatory and market differences between advising each
fund and the other clients. The board and the committee
concluded that each fund’s contractual fee rate was fair and reasonable in
relation to the services provided, as well as in relation to the risks
assumed by the adviser in sponsoring and managing each fund, and that each
fund’s shareholders receive reasonable value in return for
the advisory fees and other amounts paid to CRMC by each
fund.
