American Century adds short-duration ETF to active line-up

Oct 19th, 2022 | By | Category: Fixed Income

American Century Investments has expanded its actively managed ETF roster with the launch of a short-duration, multi-sector bond fund.

Edward Rosenberg, senior vice president and head of ETFs for American Century

Edward Rosenberg, Head of ETFs for American Century Investments.

The American Century Short Duration Strategic Income ETF (SDSI US) has been listed on Nasdaq with an expense ratio of 0.32%.

The fund fully discloses its holdings on a daily basis.

Ed Rosenberg, Head of ETFs at American Century Investments, said: “SDSI expands our existing Short Duration Strategic Income capabilities to an actively managed ETF. The Short Duration Strategic Income ETF seeks to complement an investor’s core bond holdings with high current income, broad diversification, and the potential to mitigate the impact of rising rates.”

SDSI is essentially a short-duration version of the broad-maturity American Century Multisector Income ETF (MUSI US) which launched in June 2021 and now houses $110 million in assets. The new fund leverages the same philosophy, process, and portfolio management team as its predecessor.

The ETF is co-managed by Charles Tan, Senior Vice President and co-CIO of Global Fixed Income; Jason Greenblath, Vice President and senior portfolio manager; Jeff Houston, Vice President and senior portfolio manager; and Peter Van Gelderen, Vice President and senior portfolio manager.

It aims to deliver consistent income throughout the market cycle by dynamically investing across several fixed income sectors globally including investment-grade & high yield corporate bonds, emerging market debt, and securitized bonds.

The ETF will maintain a weighted average duration of three years or shorter, and up to two-thirds of the portfolio may be allocated to non-investment-grade securities.

The portfolio managers use a sector rotation approach that integrates proprietary fundamental research and quantitative model inputs, such as economic activity, inflation, and monetary policy, as well as technical analysis of relative value among various sectors.

Security selection is then driven by fundamental, bottom-up analysis to assess relative value and creditworthiness among issuers.

American Century offers a seasoned mutual fund that follows the same strategy. This fund has returned 1.13% per annum over the past five years compared to 0.70% for the Bloomberg US 1-3 Year Government/Credit Bond Index. Year-to-date, however, the strategy has fallen 7.28% compared to a loss of 4.54% for the benchmark.

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