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5 things to know about CGGR – Capital Group Growth ETF

Maria Karahalis Brad Olalde

March 26, 2026

KEY TAKEAWAYS

  • Pure growth strategies can increase valuation and concentration risk.
  • A flexible, research‑driven approach can adapt to changing markets.
  • CGGR seeks to deliver this flexibility through deep fundamental research and multiple independent portfolio managers working across a broad opportunity set, subject to fund guidelines, without the constraints of rigid style definitions.

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1.  Flexible approach to growth

  • CGGR is principally focused on U.S.-based companies but can also invest selectively in global leaders with a meaningful U.S. presence.
  • This approach has produced a differentiated growth fund that has delivered strong returns without the concentration risk and rigidity of passive approaches.
  • The fund’s flexible approach allows managers to invest across different types of growth opportunities including cyclicals and turnarounds.

2.  Dynamic positioning

  • CGGR’s sector positioning is an outcome of bottom-up security selection, not top-down sector calls or benchmark weights.
  • As individual holdings gain or lose conviction, sector exposures naturally expand or contract, reflecting where research is uncovering growth opportunities.
  • This results in dynamic sector positioning over time, rather than static alignment with index sector weights.

Range of relative sector exposure vs. S&P 500 Index (%)

Chart shows the range of relative sector exposure of CGGR – Capital Group Growth ETF versus the S&P 500 Index in all sectors including consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, communication services and utilities. The vertical axis shows relative exposure ranging from roughly negative 10 to positive 15. For each sector, a shaded vertical bar indicates the highest and lowest relative exposure, a dashed line marks the average, and a dot shows the current exposure. Consumer discretionary and communication services show the largest positive relative exposure ranges, while information technology shows the largest negative average exposure. Other sectors display smaller positive or negative deviations around the S&P 500.

Sources: Capital Group, based on data from FactSet; S&P Dow Jones Indices. Data from fund inception date of 2/22/22 to 12/31/25.

3.  Diversified, not concentrated

  • CGGR seeks to avoid the single sector and megacap concentration that has increasingly defined style-based growth benchmarks and passive funds that track them.
  • This diversification spreads risk across the portfolio, reducing exposure to a narrow list of stocks.
  • As a result, returns have been driven by multiple contributors, rather than relying on one or two dominant megacap stocks.

Weight in top 5 holdings (%)

Horizontal bar chart shows the weight of the top five holdings for the Russell 1000 Growth Index, the S&P 500 Index and CGGR – Capital Group Growth ETF. The Russell 1000 Growth Index has the highest concentration, with 44.5% of assets in its top five holdings. The S&P 500 Index and CGGR have similar, lower concentrations, at 30.2% and 30.1% respectively.

Source: Capital Group. As of 12/31/25.

4.  Seeking growth, but not at any cost

  • CGGR invests in companies with higher growth potential than the S&P 500 Index, based on estimated earnings per share growth, but at meaningfully lower valuations than the Russell 1000 Growth Index based on price-to-earnings (P/E) ratio.
  • These conditions suggest a tradeoff for investors — paying less for earnings than in the Russell 1000 Growth with potentially better growth than the S&P 500.
  • Growth is pursued with valuation awareness — not index indifference.

Valuation metrics

Table shows the price-to-earnings ratio and estimated earnings per share for the CGGR – Capital Group Growth ETF, the S&P 500 Index and the Russell 1000 Growth Index. CGGR has a price-to-earnings ratio of 29.3 times and estimated 3- to 5-year earnings per share growth of 14.9%. The S&P 500 Index shows a lower price-to-earnings ratio of 24.7 times and estimated earnings per share growth of 12.8%. The Russell 1000 Growth Index has the highest price-to-earnings ratio at 33 times and estimated earnings per share growth of 20.2%.

Source: FactSet. As of 12/31/25.

5.  A differentiated approach

  • Using a bottom-up approach, CGGR has differentiated sector exposures compared to the S&P 500 and the Russell 1000 Growth indexes.
  • The fund has been significantly underweight technology relative to the Russell 1000 Growth (nearly one-half of the sector allocation) and underweight relative to the S&P 500.
  • This positioning is designed to deliver diversification from extreme market concentration, while breaking from conventional growth allocations.
Table shows allocation comparisons for the CGGR – Capital Group Growth ETF holdings by sector versus the S&P 500 Index and the Russell 1000 Growth Index. Information technology represents 34.4% of the allocation in the S&P 500 Index, 30.8% in the CGGR, and 50.3% in the Russell 1000 Growth Index. Communication services is 10.6% in the S&P 500 Index, 17.4% in CGGR, and 12.1% in the Russell 1000 Growth Index. Consumer discretionary accounts for 10.4% in the S&P 500 Index, 16.3% in CGGR, and 13.3% in the Russell 1000 Growth Index. Health care represents 9.6% of the S&P 500 Index, 11.4% in CGGR, and 8.1% in the Russell 1000 Growth Index. Industrials is 8.2% in the S&P 500 Index, 8.9% in CGGR, and 6.0% in the Russell 1000 Growth Index. Financials accounts for 13.4% in the S&P 500 Index, 8.1% in CGGR, and 6.4% in the Russell 1000 Growth Index. Consumer staples represents 4.7% of the S&P 500 Index, 1.9% in CGGR, and 2.4% in the Russell 1000 Growth Index. Energy is 2.8% in the S&P 500 Index, 1.4% in CGGR, and 0.3% in the Russell 1000 Growth Index. Materials accounts for 1.8% in the S&P 500 Index, 1.8% in CGGR, and 0.3% in the Russell 1000 Growth Index. Utilities represents 2.2% in the S&P 500 Index, 0.4% in CGGR, and 0.3% in the Russell 1000 Growth Index. Real estate is 1.8% in the S&P 500 Index, 0.6% in CGGR, and 0.4% in the Russell 1000 Growth Index.

Source: Capital Group, FactSet. As of 12/31/25. Numbers are rounded.

Maria Karahalis is an equity investment director and portfolio strategy manager with 39 years of experience (as of 12/31/25). She holds a master’s degree in management from MIT Sloan School of Management and a bachelor’s degree in economics from Wellesley College.

Brad Olalde is an senior investment product manager with 13 years of industry experience (as of 12/31/2025). He holds a bachelor's degree in finance and international business from Villanova University.

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Price-to-earnings (P/E) ratio is a valuation metric that measures a company’s current share price relative to its earnings per share (EPS).
 

Russell 1000 Growth Index: Tracks large-cap U.S. growth stocks by market capitalization.
 

S&P 500 Index: A market-capitalization-weighted index of about 500 major U.S. stocks. Includes reinvested dividends but excludes fees and taxes.
 

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