American Century launches its first ETFs

Jan 18th, 2018 | By | Category: Alternatives / Multi-Asset

American Century Investments has become the latest asset manager to roll out ETFs with the launch of the the American Century STOXX US Quality Value ETF (VALQ US) and American Century Diversified Corporate Bond ETF (KORP US) on NYSE Arca.

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

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

Edward Rosenberg, senior vice president and head of ETFs for American Century, commented: “Our goal with the launch of American Century ETFs is to provide innovative strategies that strive to deliver better outcomes for investors.

“We are excited to be launching our first two ETFs, which we see as ‘core’ investments that can serve as a central, foundational component of a long-term portfolio.”

VALQ provides a passive investment in US equities while employing a smart beta investment approach to increase exposure to quality and value risk premia, and has an expense ratio of 0.29%.

It tracks the iSTOXX American Century USA Quality Value Index, seeking to deliver a more attractive risk/reward profile than the market capitalization-weighted value investing typical of traditional index funds.

The index, which is based on the STOXX USA 900 Index of the largest 900 US-listed companies, allocates to both quality companies with attractive valuations and companies with sustainable income. The index applies measures such as profitability, earnings quality, management quality, and earnings revisions to identify high-quality companies at attractive valuations. It complements them with sustainable dividend-payers to help mitigate risk when value investing falls out of favour.

The index further utilizes American Century’s ‘Intelligent Beta’ methodology, which strives to dampen the cyclicality of factor investing by dynamically adjusting the weightings of the strategies within the index based on a volatility-adjusted trend signal.

KORP meanwhile is actively managed and focused on investment-grade corporate debt while also dynamically allocating a portion of the portfolio to high-yield bonds. Its focus is on income generation, with a secondary target of capital appreciation.

By integrating fundamental and quantitative expertise, the portfolio management team strives for enhanced return potential versus traditional capitalization-weighted passive portfolios. It has an expense ratio of 0.45%.

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