Capital Group professes to dislike publicity.

The Los Angeles asset management company does virtually no advertising, and its executives rarely submit to interviews.

But publicity has a way of finding companies with the size and success of Capital Group, the parent of the fund giant Capital Research and Management.

Over the past few years, profiles in newspapers and magazines have appeared under headlines like: "Capital Research: Steak, No Sizzle," "The Giant Nobody Knows," and "Capital Group Isn't a Household Name, But Billions of Dollars Keep Pouring In."

Capital Group, which has quietly become the third-largest fund company in the United States, may soon be in for a lot more media exposure: Lately industry observers have named it as a possible acquisition target for Goldman, Sachs & Co., which is in the market for an asset management company.

"It's a natural fit," said Burton Greenwald, a mutual fund consultant in Philadelphia. "They are both Tiffany outfits. Capital Research and Management has a huge retail presence that Goldman doesn't have, and their institutional presence would be a complement to Goldman's."

Capital Group executives declined to be interviewed for this article, and Goldman did not respond to questions.

To put things in perspective, Capital Group is just one fund company being discussed as a Goldman merger target-two of the others most frequently cited are Amvescap PLC and T. Rowe Price.

And a deal with Capital Group may well be a long shot. The company is privately held and does not have the leadership succession questions that often prompt asset management companies to sell out.

"There's no need to do it unless Goldman pushes so much money at them that they have to," said A. Michael Lipper, the president of Lipper Inc. in Summit, N.J.

But if Goldman chose to make an offer that Capital could not refuse, it would get a lot in return, said Steven C. Pierson, a vice president at the investment bank Putnam, Lovell, de Guardiola & Thornton Inc. in New York.

"They are one of the few players you would find worthwhile if you wanted to make a significant retail play," he said.

With $295 billion of retail assets under management, Capital Group trails only Fidelity Investments and Vanguard Group as a fund manager.

It is beloved by brokers, including those at banks, for its consistent fund performance and sales support.

In addition to being a strong retail player, Capital has an important institutional presence, with about $125 billion of assets managed for institutional clients in the United States and abroad.

Goldman could leverage its relationships with governments around the world to sell Capital Group's pension management expertise as more countries privatize their retirement systems, Mr. Greenwald suggests.

With a conservative style that eschews aggressive growth and avoids small- and mid-cap investments, Capital's American Funds, run by Capital Research and Management, have become a cornerstone of many retail investors' portfolios.

Its two biggest funds - Washington Mutual Investors, with $52.8 billion of assets under management, and Investment Company of America, with $50 billion - are both growth and income vehicles.

"They've carved out a niche of being a relatively conservative company that doesn't go for fads and isn't trying to do everything," said Mike Scafati, senior vice president at A.G. Edwards & Sons Inc. the brokerage firm based in St. Louis.

Its stock funds had the best performance last year of the 10 largest fund families-ditto for the last three years and the last five years, according to Morningstar Inc.

But it is consistency, rather than spectacular results, that makes for loyal customers. Overall, the fund family was ranked ninth in performance over the five years through 1998 by Lipper.

"I've been in this business for 15 years, and I have never had a disappointed client at American Funds," said Curt Anderson, the president of Champaign, Ill.-based First Busey Securities, where American Funds account for 80% of the mutual fund sales. "They are very consistent and reliable, and that makes me look good."

Fans of the company credit low portfolio manager turnover and a team approach for its fund performance. Unlike fund companies that use a star system, Capital Research and Management appoints several managers to run each portfolio, with each responsible for a portion of the fund.

If one or two leave, the core management is still there. But they rarely leave. Tenure for managers at its five biggest funds is 10 to 17 years.

And to keep its portfolio managers thinking about the long term, the company uses a rolling pay system based on performance over four years.

So how have the American Funds done so well without advertising? Brokerage executives say the company has built loyalty among its sales force with the funds' performance and great sales support.

"Brokers have faith in the fact that when they represent (an American Funds product) to a client, it's going to perform in line with what you expect a fund with that objective to do," Mr. Scafati said.

Capital's sales materials get high marks: Mike Mortensen, president and CEO of PNC Brokerage Corp. in Pittsburgh, calls an American Funds brochure that covers the basics of mutual fund investing "the bible." Brokers routinely use it even when they are selling other companies' funds, he said.

It is impossible to say exactly how much sales of American Funds are generated through banks. But bank brokerage executives say the funds are widely known and sell well.

And they report that the company added a bank-channel chief about a year ago, promoting Francis Strazzeri to that post from within the company.

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