“I actually moved to Singapore 30 years ago this week,” says Gitlin, who joined Capital Group in 2015, during a fireside chat that was held as part of the asset manager’s Apac media day on April 22. “So, I worked in the UOB Plaza in 1996 and 1997.”
“I always think folks who have the opportunity to live somewhere else in the world from where they were born, do it. You learn another culture. You just have a much better global perspective if you are able to do that,” adds Gitlin. “When you leave, you are much richer for that experience, and you can bring that experience into other conversations.”
A lot has changed in the investment industry since Gitlin entered it in the early 1990s. For one, there has been a broad shift from active to passive investing. According to Morningstar, inflows into US passive funds have outpaced active funds over the past decade. As of October 2025, passive funds in the US held over US$19.1 trillion ($24.3 trillion) in assets versus the US$16.2 trillion in assets held by active funds, Morningstar adds.
“Passive is a big part of the industry. It’s grown tremendously over the last 30 years. In equities, it might be 50% of the market, and as you see consolidation in active, the days of our clients using 100 [or] 200 active managers are over,” says Gitlin. “We are going to drive consolidation in the industry, and there’s plenty of assets to be managed globally for all of us who are remaining.”
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The traditional 60/40 portfolio mix is starting to face scrutiny, with critics questioning the value of holding bonds when stocks and bonds can both fall during inflation spikes or rising interest rates. For them, cryptocurrencies and private markets look far more attractive. Gitlin, however, believes that the tried and tested 60/40 portfolio mix will continue to be a staple for years to come.
“I laugh when I hear that 60/40 is dead. It’s a ridiculous comment. It really is,” Gitlin says, adding that the Capital Group American Balanced Fund, which adopts a 60/40 portfolio mix, has been generating an annualised return of 8.7% over 30 years, after fees.
“Think about that 8.7% annualised over 30 years against the backdrop of other asset classes. Cash did 2%. Bonds with 4%. MSCI ex-US did 6%. MSCI did 8%, and the S&P 500 with dividends reinvested did 10%,” Gitlin says. “To quote Mark Twain, the death of 60/40 has been greatly exaggerated.”
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“It doesn’t mean that private markets can’t be value-added in a portfolio and a diversifier and a good return generator, but it means 60/40 is liquid, transparent, cheap and can be a core part of the portfolio.”
China’s energy resilience runs deeper
Besides Gitlin, Capital Group’s media event featured presentations from their portfolio managers and executives. In a session titled “Equity Investing Perspective,” portfolio manager Noriko Chen told reporters that the first Trump administration, as well as the Covid-19 pandemic, had helped to foment a wave of localisation and regionalisation among companies. “I think being an active manager during this period is actually super exciting because when you see this rotation in leadership across markets, you really need active managers to identify who is going to lead next and who is going to benefit from these changes.”
One notable market emphasised by Chen in her comments was China. The country’s diverse energy mix, which spans oil and gas, coal, hydropower, solar, wind and nuclear power, has made it resilient to energy shocks caused by the war in Iran.
“I used to be an energy analyst, and when I first started, [China was] importing about 75% of its energy requirements from the Middle East. Now they have actually gotten that down to 20% to 30% over the past 20 years,” says Chen, who is also a member of Capital Group’s management committee, which oversees the firm globally.
For Chen, China’s push to own and diversify its sources of energy is part of a larger strategy to localise its industries and economy.
“This localisation means that the Chinese government really wants their companies to build a lot of different products,” Chen says. “They don’t want to rely on foreign companies for any part of their supply chain. That has a lot of ramifications and impacts on a lot of other companies that are exporting products into China.”
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The push for localisation has allowed some of China’s local industrial champions to produce better products and seize market share outside of China as well, Chen adds. “You are starting to see some market leadership traits, and as a result of that, it can have a significant impact on companies in the US and Japan.”
Oil companies aren’t attractive
While the ongoing blockade of the Strait of Hormuz has sent oil prices surging, Chen does not see the sector as particularly attractive, despite some rotation into it on the back of higher energy prices.
“Fundamentally, a lot of the companies still don’t look that interesting because they are not growing that much,” Chen says. “They will also be impacted by higher inflation as well, so we don’t see significant growth from a lot of the oil and gas companies even if oil prices go from US$60 to US$70 to US$80.”
Instead, Chen prefers commodity companies as they have structural growth potential. “They are more leveraged to maybe EVs or to AI. You have got to infrastructure spend, so I think there’s been a little bit more investment there.”
Asia’s value unlock
Aside from China, Chen and her team have their sights on Asian countries such as Japan, whose value unlock initiatives have injected vitality into the region’s markets. According to Chen, Apac accounts for about 50% to 60% of global GDP but only 25% to 28% of the world’s total market value.
“The reason why it’s not the same is because you have got a lot of state-owned enterprises. You have a lot of companies that don’t maximise their profitability,” Chan says. “They were meant to maximise employment, or in China’s case, they were trying to get a lot of people out of poverty.”
Those goals have now changed. Changing demographics mean that these countries now have to focus on building up their pension funds for their quickly ageing societies. “When our analysts started talking about how the regulators wanted companies to be more profitable, we got super excited because usually the regulators want companies to be less profitable,” Chen says.
So far, the value unlock programmes being pursued by Japan and South Korea have yielded promising results. Japan’s Nikkei and South Korea’s Kospi indices are up by 21% and 57% year to date, respectively. Nonetheless, Chen says investors need to be patient because such reforms take time to produce results.
“They are increasing share buybacks, increasing dividends, and they are going into the harder stage, which is asset restructuring. This takes many years to go through and have an impact on profitability.”
Huge investments in AI are justified
Companies have not been holding back on AI spending. Meta Platforms Inc says it expects to spend up to US$135 billion on AI in 2026, nearly double the US$72 billion it spent in 2025. Those eye-watering figures have fuelled concerns that firms are getting caught up in the AI hype and overspending.
Chen disagrees with such a view. She believes that these investments are in line with the amount of energy and infrastructure that will be needed to service their AI products. According to Chen, companies will need 10 to 15 gigawatts of energy in order to operate at scale.
“So, the amount of investment that they are doing, US$100 to US$150 billion a year, we think is justified because it basically translates to about three gigawatts out of that 10 to 15 that they need,” Chen says.
“This might be a period where a number of these companies are investing, where margins come down a bit as they are investing. We would expect that as they go through that investment at scale, they would be able to see much higher margins and returns, post that investment or through this investment.”
US dollar reserve status holds
Recent geopolitical events, such as President Donald Trump’s Liberation Day tariffs, have prompted investors to reconsider the US dollar’s reserve currency status. In January, the Bloomberg Dollar Spot Index fell to its lowest level since March 2022.
Capital Group’s fixed income investment director, Manusha Samaraweera, urged investors to exercise caution before passing judgment. The dollar’s movements over the past 12 months were driven more by short-term fundamentals than structural changes, he says.
“One of the key drivers of the strength of the US dollar for a number of decades now is the fact that the US economy has experienced higher real rates than the rest of the world. We have seen that converge over the most recent period of time, and that’s part of the reason why we have seen a weaker US dollar,” Manusha told reporters in a session titled “Fixed Income Investing Perspective.”
“The other reason we have seen a weaker US dollar is that we have seen real growth rate convergence as well,” he adds. “18 months ago, the US was one of the only developed markets that was truly driving the global economy from a growth perspective. Fast forward to today, and that’s not the case anymore. There’s actually a lot of economies around the world that are also contributing quite well to growth.”
While this suggests the US dollar may weaken slightly going forward, Manusha says investors should not mistake that weakness for the death knell of the world’s leading reserve currency. “It’s not to say that we think it won’t. It’s just that we need to see a lot more evidence to suggest that that’s the case for us to finally conclude.”
