Capital Group Sued Over In-House Funds in Employee 401(k) Plan

Investment manager Capital Group Cos. was hit with a proposed class action challenging the affiliated American Funds in its employees’ 401(k) plan.

The lawsuit, filed Tuesday in the US District Court for the Central District of California, takes aim at Capital Group’s decision to offer five of its proprietary American Funds in the $5 billion retirement plan covering its workforce, despite a market “brimming with better-performing large-cap alternatives.” These funds, which are managed by a Capital Group subsidiary, have underperformed their designated benchmarks by substantial margins for nearly a decade, according to the lawsuit.

“The Capital Group Defendants’ ongoing ...