Nearly three years to the day from the launch of its first ETFs, American Century Investments rolled out the global asset management firm’s first actively-managed low-volatility ETF, fittingly named the American Century Low-Volatility ETF (LVOL), listed on the NYSE Arca, starting Thursday. Designed for investors seeking capital appreciation, LVOL, with a total expense ratio of 0.29 percent, will disclose its holdings daily.
“We have the opportunity to offer an ETF that has the objective of tempering volatility using our proprietary active methodology,” said Ed Rosenberg, head of ETFs for the firm. “Because LVOL is actively managed, it will enable a nimble approach that can adapt to quantitative insights and challenging market conditions.”
American Century Low Volatility ETF’s managers use quantitative models to select securities with attractive fundamentals that they expect will provide returns that will reasonably track the market over the long term while seeking less volatility.
According to Rosenberg, the LVOL portfolio managers aspire to deliver market returns in normal markets while losing less in drawdowns by correcting low-volatility indexes’ shortcomings. “We’re emphasizing strong fundamentals in an effort to limit potential risk of speculative companies with questionable profits,” he said. “We’re also expanding risk measures beyond volatility to capture other downside and balance sheet risks while focusing on volatility at the portfolio level as well as the individual stock level.”
Rounding Out American Century
The fund is co-managed by Steven Rossi, CFA, Tsuyoshi Ozaki (both of the Disciplined Equity team), and Rene Casis. Rossi joined American Century from RS Investments in 2016, Ozaki from Axioma Inc. in 2017, and Casis from 55 Institutional and BlackRock before that, in 2018.
The launch of LVOL rounds out a successful three-year period for American Century’s ETF business. “Since the launch of our ETFs, American Century has been one of the fast-growing new entrants into the ETF space,” Rosenberg said. “We’ve raised more than $3.5 billion since 2018.” (American Century and Avantis Investors ETFs combined.) Its initial offerings, American Century STOXX U.S. Quality Value (VALQ) and American Century Diversified Corporate Bond (KORP), rolled out January 2018, followed by American Century Quality Diversified International ETF (QINT), American Century STOXX U.S. Quality Growth ETF (QGRO) and American Century Diversified Municipal Bond ETF (TAXF) later that year.”
In April 2020, the firm became the first asset manager to launch two actively managed, semi-transparent exchange traded funds utilizing Precidian Investments’ ActiveShares methodology: American Century Focused Dynamic Growth ETF (FDG) and American Century Focused Large Cap Value ETF (FLV). In July, American Century launched two active Environmental, Social and Governance ETFs, American Century Sustainable Equity ETF (ESGA) and American Century Mid Cap Growth Impact ETF (MID) utilizing the New York Stock Exchange (NYSE) Actively Managed Solution, the first-time use of the new active ETF structure.
For more information about American Century Investments, visit americancentury.com.
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