Capital Group ETFs Seek Board Elections, Fee Structure Changes, and Fund Reclassification

Capital Group Growth Etf DEF 14A Filing Summary
FieldDetail
CompanyCapital Group Growth Etf
Form TypeDEF 14A
Filed DateSep 9, 2025
Risk Levelmedium
Pages15
Reading Time18 min
Key Dollar Amounts$1.70
Sentimentmixed

Sentiment: mixed

Topics: ETF Governance, Shareholder Meeting, Advisory Fees, Fund Reclassification, Investment Company Act, Capital Group, Bond Funds

TL;DR

**Capital Group is shaking up governance and fees across its fund lineup, aiming for stability and flexibility, but watch out for increased risk in TEFNY!**

AI Summary

Capital Group Growth ETF, along with other American Funds and Capital Group ETFs, is holding a special shareholder meeting on November 25, 2025, to address three key proposals. Shareholders are being asked to elect Board members, a necessary step as it has been several years since the last election and changes in Board composition necessitate new elections to maintain the two-thirds elected member requirement under the 1940 Act. Additionally, shareholders of ten specific bond funds, including American Funds Mortgage Fund and The Bond Fund of America, will vote on amending their Investment Advisory and Service Agreements to transition from an asset and income-based fee schedule to an asset-only fee schedule, aiming for greater fee stability. Finally, shareholders of American Funds Tax-Exempt Fund of New York (TEFNY) will vote on reclassifying the fund from 'diversified' to 'non-diversified' under the 1940 Act, which would grant its investment adviser, Capital Research and Management Company (CRMC), greater investment flexibility, albeit with additional risks.

Why It Matters

This DEF 14A filing signals significant governance and operational changes across a broad spectrum of Capital Group and American Funds offerings, impacting investors directly through potential fee structure alterations and changes to fund diversification strategies. The proposed shift to an asset-only advisory fee for ten bond funds could stabilize costs for investors, particularly in volatile interest rate environments, offering a competitive edge against rivals with more variable fee models. The reclassification of American Funds Tax-Exempt Fund of New York to 'non-diversified' provides its adviser, CRMC, enhanced flexibility, which could lead to higher returns but also increased risk, a critical consideration for municipal bond investors. These changes reflect Capital Group's proactive adaptation to market dynamics and regulatory requirements, aiming to optimize fund performance and oversight.

Risk Assessment

Risk Level: medium — The reclassification of American Funds Tax-Exempt Fund of New York (TEFNY) from 'diversified' to 'non-diversified' introduces additional risks, as non-diversified funds are not subject to the 1940 Act's limits on investing more than 5% of total assets in one issuer or holding more than 10% of an issuer's voting securities. This increased concentration risk could lead to higher volatility. While the fee schedule change for other funds aims for stability, the potential for higher risk in TEFNY warrants a medium risk assessment.

Analyst Insight

Investors in American Funds Tax-Exempt Fund of New York should carefully evaluate the implications of its proposed reclassification to 'non-diversified' due to increased investment flexibility and associated risks. All shareholders should vote on the Board member elections to ensure proper governance and consider the long-term impact of the proposed fee structure changes on their bond fund investments.

Financial Highlights

total Assets
Not Disclosed
total Debt
Not Disclosed

Key Numbers

  • November 25, 2025 — Shareholder Meeting Date (Date of the Joint Special Meetings of Shareholders)
  • August 28, 2025 — Record Date (Date for determining shareholders entitled to vote)
  • 10 — Number of Funds (Number of bond funds proposing advisory fee schedule amendments)
  • 1 — Number of Funds (Number of funds proposing diversification classification change (TEFNY))
  • 2/3 — Board Member Election Requirement (Minimum proportion of Board members that must be elected by shareholders under the 1940 Act)
  • $1.70 — Estimated Cost Per Shareholder Account (Average estimated cost for obtaining shareholder approval of proposals)
  • 9:00 a.m. Pacific Time — Meeting Time (Start time for the Joint Special Meetings of Shareholders)
  • 3 — Number of Proposals (Total number of proposals to be voted upon by shareholders)
  • 888-615-7476 — Shareholder Assistance Phone Number (Contact number for Computershare for voting assistance)
  • 333 South Hope Street, Los Angeles, California 90071 — Meeting Location (Address of the Capital Group office where the shareholder meeting will be held)

Key Players & Entities

  • Capital Group Growth ETF (company) — Registrant for DEF 14A filing
  • American Funds Mortgage Fund (company) — Fund affected by fee schedule amendment
  • American High-Income Trust (company) — Fund affected by fee schedule amendment
  • The Bond Fund of America (company) — Fund affected by fee schedule amendment
  • American Funds Tax-Exempt Fund of New York (company) — Fund proposing diversification classification change
  • Capital Research and Management Company (company) — Investment adviser for TEFNY
  • Michael W. Stockton (person) — Executive Vice President of the Funds
  • Computershare Fund Services (company) — Company hired to assist with shareholder meetings and proxy solicitation
  • Securities and Exchange Commission (regulator) — Regulates DEF 14A filings
  • Investment Company Act of 1940 (regulator) — Governs fund classifications and board composition

FAQ

What are the key proposals for the Capital Group Growth ETF shareholder meeting?

The key proposals for the Capital Group Growth ETF shareholder meeting on November 25, 2025, include the election of Board members, the approval of an amended investment advisory and service fee schedule for ten specific bond funds, and the approval of a change in American Funds Tax-Exempt Fund of New York's classification from 'diversified' to 'non-diversified'.

Why is Capital Group proposing a change in the investment advisory fee schedule for certain bond funds?

Capital Group is proposing to change the investment advisory fee schedule for ten bond funds, including American Funds Mortgage Fund, to an asset-only fee structure. This aims to create stability and consistency in fees for investors, eliminating the potential for higher advisory fees during dynamic interest rate environments, which was a characteristic of the previous asset and income component fee structure.

What does the reclassification of American Funds Tax-Exempt Fund of New York mean for investors?

The reclassification of American Funds Tax-Exempt Fund of New York (TEFNY) from 'diversified' to 'non-diversified' means the fund will no longer be subject to certain 1940 Act limits on asset concentration. This change, if approved, will give its investment adviser, Capital Research and Management Company, greater investment flexibility but also introduces additional risks associated with a less diversified portfolio.

When and where is the Capital Group shareholder meeting being held?

The Joint Special Meetings of Shareholders for Capital Group and American Funds ETFs will be held on November 25, 2025, at 9:00 a.m. Pacific Time, at the office of Capital Group, located at 333 South Hope Street, Los Angeles, California 90071.

Who is recommending the proposals in the Capital Group DEF 14A filing?

The Board of Directors or Trustees of each Fund, including Capital Group Growth ETF, has unanimously approved proposals 1-3 and recommends that shareholders vote 'FOR' each of these proposals, believing them to be in the best interests of shareholders.

What is the estimated cost per shareholder account for these proposals?

The estimated cost associated with obtaining shareholder approval of the proposals, including printing, mailing, and proxy solicitation, is approximately $1.70 per shareholder account, which will be borne by the Funds.

What happens if the proposals are not approved by shareholders?

If there are not enough votes to approve a proposal for a Fund, the meeting may be adjourned to solicit further proxy votes. If a proposal is ultimately not approved, the Fund will continue to operate as it currently does. For EMEF or EUPAC, if Proposal 1 is not approved, current trustees will continue to serve.

How can shareholders of Capital Group Growth ETF vote?

Shareholders can vote online, by phone, by mail using the enclosed proxy card, or in person at the shareholder meeting. Instructions and identifying numbers for online or phone voting are provided on the proxy card or meeting notice.

Why are Board members being elected now for Capital Group funds?

Board members are being elected because it has been several years since the Funds held shareholder meetings for this purpose, and subsequent changes in Board composition necessitate new elections. This ensures that at least two-thirds of the Board members are elected by shareholders, as required by the Investment Company Act of 1940, and allows for adding new members without frequent shareholder meetings.

Which specific funds are affected by the proposed advisory fee schedule amendment?

The proposed amendment to the Investment Advisory and Service Agreement to modify the fee schedule affects American Funds Mortgage Fund, American High-Income Trust, The Bond Fund of America, U.S. Government Securities Fund, Intermediate Bond Fund of America, American High-Income Municipal Bond Fund, Limited Term Tax-Exempt Bond Fund of America, The Tax-Exempt Bond Fund of America, The Tax-Exempt Fund of California, and American Funds Tax-Exempt Fund of New York.

Risk Factors

  • Board Member Election Requirement [medium — regulatory]: Under the 1940 Act, at least two-thirds of a fund's Board members must be elected by shareholders. This meeting is necessary to elect new members as it has been several years since the last election and changes in Board composition. Failure to meet this requirement could necessitate additional shareholder meetings.
  • Diversification Classification Change (TEFNY) [medium — regulatory]: American Funds Tax-Exempt Fund of New York (TEFNY) is proposing to reclassify from 'diversified' to 'non-diversified' under the 1940 Act. This change grants greater investment flexibility to the adviser but introduces additional risks for investors, as non-diversified funds are not subject to the same issuer concentration limits.
  • Investment Advisory Fee Stability [low — market]: Ten bond funds are proposing to shift from an asset and income-based fee schedule to an asset-only schedule. This aims to provide greater fee stability, particularly in dynamic interest rate environments where the current structure can lead to variability in fees charged.

Industry Context

The asset management industry is highly competitive, with firms constantly seeking to optimize fund structures and fee arrangements to attract and retain investors. Regulatory compliance, particularly under the 1940 Act, is a critical aspect of operations. Trends include adapting to market volatility, such as interest rate fluctuations, and offering greater investment flexibility where appropriate, balanced against investor risk profiles.

Regulatory Implications

The proposals directly address requirements and classifications under the 1940 Act. The board election proposal ensures compliance with shareholder representation rules. The fee structure changes aim for stability within regulatory frameworks, while the diversification reclassification for TEFNY involves a significant shift in regulatory status and associated investment strategies.

What Investors Should Do

  1. Vote on the three key proposals presented in the Joint Proxy Statement.
  2. Review the Joint Proxy Statement for details on nominees and the rationale behind the proposed changes.
  3. Contact Computershare at 888-615-7476 for voting assistance.

Key Dates

  • 2025-11-25: Joint Special Meetings of Shareholders — Shareholders will vote on key proposals including board member elections, advisory fee amendments for bond funds, and a diversification classification change for TEFNY.
  • 2025-08-28: Record Date — Determines which shareholders are entitled to vote at the special meetings.

Glossary

1940 Act
The Investment Company Act of 1940, a U.S. federal law that regulates the organization of companies, including mutual funds, that engage in investing, reinvesting, and trading in securities, and whose primary trading purpose is not the speculation or trading of securities. (Governs the requirements for board member elections, fund diversification, and investment advisory agreements.)
Diversified Fund
Under the 1940 Act, a diversified fund has restrictions on its investments, typically meaning that for 75% of its assets, it cannot invest more than 5% of its assets in any single issuer and cannot hold more than 10% of the outstanding voting securities of any single issuer. (American Funds Tax-Exempt Fund of New York (TEFNY) is proposing to change its classification from diversified to non-diversified, which will alter its investment flexibility and associated risks.)
Non-Diversified Fund
Under the 1940 Act, a non-diversified fund is not subject to the same issuer concentration limits as a diversified fund, offering greater investment flexibility. (TEFNY's proposed reclassification to non-diversified status will allow its investment adviser, CRMC, more flexibility.)
Proxy Statement
A document required by the SEC that provides shareholders with information about a company's business and financial condition, and details about matters to be voted on at a shareholder meeting. (This DEF 14A filing is a proxy statement detailing the proposals for the upcoming shareholder meetings.)
Asset-Only Fee Schedule
A fee structure for investment advisory services that is based solely on the value of the assets under management. (Ten bond funds are proposing to move to this type of fee schedule from a combined asset and income-based schedule to achieve greater fee stability.)

Year-Over-Year Comparison

This filing is a proxy statement for a special shareholder meeting, not an annual report. Therefore, direct year-over-year comparisons of financial metrics like revenue growth or margins are not applicable. The focus is on upcoming shareholder votes concerning governance (board elections), fee structure adjustments for specific bond funds, and a regulatory classification change for one fund, indicating proactive management in response to market conditions and regulatory requirements.

Filing Stats: 4,405 words · 18 min read · ~15 pages · Grade level 13.7 · Accepted 2025-09-09 16:17:58

Key Financial Figures

  • $1.70 — average across all Funds approximately $1.70 per shareholder account. How many vote

Filing Documents

– The Proposals

Part I – The Proposals     Proposal 1 – To elect Board members of the Funds   3 Proposal 2 – To approve the proposed amendment of the Investment Advisory and Service Agreement to modify the investment advisory and service fee schedule for each of American Funds Mortgage Fund, American High -Income Trust, The Bond Fund of America, U.S. Government Securities Fund, Intermediate Bond Fund of America, American High -Income Municipal Bond Fund, Limited Term Tax -Exempt Bond Fund of America, The Tax -Exempt Bond Fund of America, The Tax -Exempt Fund of California, and American Funds Tax -Exempt Fund of New York   8 Proposal 3 – To approve the proposed change to the diversification classification for American Funds Tax -Exempt Fund of New York from a diversified to a non -diversified registered investment company   13 Part II     Additional Information about the Funds   15 Audit Committee   16 Further Information About Voting and the Shareholder Meetings   17 EXHIBITS     Exhibit A – Series and Included Fund(s )     Exhibit B – Form of Nominating and Governance Committee Charte r     APPENDICES     Appendix 1 – Board Member and Nominee Informatio n     Appendix 2 – Board and Committee Meetings; Committee Compositio n     Appendix 3 – Board Member Compensation and Fund Ownershi p     Appendix 4 – Executive Officer s     Appendix 5 – Total Shares Outstandin g     Appendix 6 – Principal Beneficial Holder s     Appendix 7 – Independent Auditors and Related Fee s     Appendix 8 – Comparison of Current and Proposed A

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