Jon B. Lovelace, who guided the Los Angeles-based American Funds mutual fund company as it became one of the country’s largest money-management firms, died Nov. 16 at his home in Santa Barbara, Calif. He was 84.
His wife, Lillian Lovelace, confirmed his death but did not disclose the cause.
Mr. Lovelace is credited with some of the key innovations that helped set the stage for American Funds’s explosive growth from the 1980s through the mid-2000s, as it became synonymous with successful buy-and-hold stock investing.
The parent firm, Capital Group, manages about $1.2 trillion in all, most of that in 33 mutual funds owned by tens of millions of Americans.
Mr. Lovelace nurtured an egalitarian environment at Capital, the polar opposite of the authoritarian regimes of many Wall Street firms. His daughter, Carey Lovelace, once referred to him as a “Buddhist businessman” who disdained hierarchy and personal aggrandizement.
Although Mr. Lovelace ultimately held the title of chairman of Capital’s fund business until he retired in 2005, “He liked the symbolism of not having titles,” said Paul Haaga Jr., a Capital executive who joined the firm in 1985.
Jonathan Bell Lovelace Jr. was born Feb. 6, 1927, in Detroit and grew up in Beverly Hills, Calif. He legally changed his name to Jon B. Lovelace to eliminate the “Jr.,” his daughter said.
He initially was reluctant to join the company that his father, Jonathan Bell Lovelace, had founded in Los Angeles as Capital Research and Management in 1931.
The elder Lovelace, a stockbroker, thought equities had become overpriced in the heady days of the late 1920s. He sold most of his investments before the 1929 crash.
With his new company, the elder Lovelace began to focus on mutual fund management in the 1930s as stocks began to recover from the crash. The younger Lovelace served in the Navy from 1944 to 1946 and studied economics at Princeton University, graduating in 1950. His father then sought to recruit him to Capital.
Jon Lovelace balked. He “wanted to make his own way and was concerned about being subordinated to his father, or succeeding simply because his father made it easy,” wrote Charles Ellis in the 2004 book “Capital: The Story of Long-Term Investment Excellence.”
After a brief stint at a consumer finance company, however, Mr. Lovelace agreed to join his father, taking a position as a statistician at Capital. His role at the firm began to grow after his father had a heart attack in 1953.
Like his father, Mr. Lovelace had an affinity for numbers and trusted in the idea that well-researched stock picking — and a long-term investing view — were the keys to success in the market.
In 1958, Mr. Lovelace launched a new approach to fund management. Rather than having a single individual manage a portfolio, he created a “multiple counselor” system, whereby four or more managers would independently run slices of a fund.
Although it seemed like an invitation to anarchy, Mr. Lovelace saw the system as a way to produce investment results that would be “a blend of each manager’s best efforts,” according to Ellis.
It also fit with Mr. Lovelace’s dislike of the traditional Wall Street “star” system. “Because of the nature of our structure, we’re not highly dependent on one person, as some organizations are,” Mr. Lovelace told the Los Angeles Times in 1991.
The multiple-counselor system produced powerful long-term investment returns on many of American’s stock funds, which in turn made the company a favorite of brokerages eager to sell winning products.
The firm’s assets soared from $146 million in 1955 to $60 billion by 1990, then rocketed to $560 billion by 2000 as individual investors poured into the market.
Mr. Lovelace also made the critical decision to spread ownership of privately held Capital away from the family and into the hands of top employees. Capital employs 7,500 people worldwide.
Survivors include his wife of 61 years, Lillian Pierson Lovelace; four children, Carey Lovelace of New York City, Jim Lovelace of Los Angeles, Jeffrey Lovelace of Santa Barbara and Robert Lovelace of Hermosa Beach, Calif.; two sisters; and six grandchildren.