Executive Summary / The Pacesetter

In the money management game in Los Angeles, a great gulf separates the two largest operations from everyone else. Capital Research & Management and Capital Guardian Trust Co. the investment management and trust company arms of Capital Group Cos. control nearly $500 billion combined.

The next 11 largest players have between $10 billion and $100 billion under management. In that group, No. 3 Western Asset Management Co. and No. 5 Payden & Rygel showed the most growth last year.

Western Asset reappearing on the list saw assets under management surge by $17.7 billion, or 23 percent, to $94.2 billion. Payden & Rygel, a specialist in the areas of bonds and international investments, jumped 25 percent, to $38.1 billion.

Rising to No. 11 from 12 on the list was Metropolitan West Asset Management, continuing a quick ascent. MetWest, which hired former vice president Al Gore several months ago, was No. 17 on the list two years ago.

Anthony Palazzo

The Pacesetter

Publicity-shy Capital Research & Management is the investment adviser for one of the largest mutual-fund families in the nation. Its affiliate, American Funds Group, is third in the nation after Fidelity and Vanguard Group, and provides the bulk of Capital Research’s $367 billion in assets under management.

American Funds had 7.8 percent of the U.S. mutual fund market in May, up from 7.3 percent for the like year-earlier period and ahead of Putnam Investments, Janus and T. Rowe Price, according to data from Financial Research Corp.

The largest fund Capital Research manages is the $55 billion Investment Co. of America fund. It was established in 1934, investing in growth and income stocks. “It invests in blue-chip companies with a history of paying dividends and increasing earnings,” said Capital Research spokesman Chuck Friedhoff.

Unlike its rivals, Capital Research doesn’t court publicity; it sells its funds through brokers on the theory that investors who buy mutual funds using professional advice are most likely to hold the funds for a long period of time matching Capital Research’s own buy-and-hold strategy.

“It’s to the existing shareholders’ advantage to (bring in) long-term investors,” Friedhoff said.

Capital Research and American Funds are both owned by Capital Group Cos., whose trust arm, Capital Guardian Trust Co., is second on this year’s list. Capital Group was founded in 1931 by Jonathan Bell Lovelace.

Anthony Palazzo