Our founding: The JBL story | Capital Group

Capital stories

Our founding: the JBL story

The seeds of The Capital Group were planted in the United States 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 its history. Widespread pessimism over the future of business hovered like a black cloud, as 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 organisation) had spent much of his time at an investment banking and brokerage firm in Detroit, Michigan. It was there that he developed his investment research techniques and earned a reputation for achieving impressive investment results. However, by 1929, he could see no logical relationship between stock market prices and their underlying values.

Unable to convince his associates that there was a risk of a major downturn, JBL sold his 10% interest in his company 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.

In 1931, JBL moved to California and within two years reentered the financial world by launching a small investment management firm that would later become Capital Group. JBL was determined to ensure that this new organisation would not suffer the pitfalls of other managers of the time. Based on his experiences and observations, he felt that fundamental research was the answer, and this focus on research remains a cornerstone of Capital Group.

A year after JBL founded Capital Group, trustees of an investment trust called The Investment Company of America (ICA) approached him to help reorganise the fund, which he had helped to form previously. It was a complicated situation, but after extended discussions, JBL agreed and the reorganised ICA began in 1933. Today, ICA is one of the largest and most successful mutual funds in the world-and flagship of Capital's iconic American Funds family.

The small company JBL founded more than 80 years ago has grown into a thriving global complex with some 7,000 associates and more than USD$1 trillion in assets under management. Today, Capital Group is one of the largest and most respected investment management firms in the world.

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