The Best of American Century
This two-part series highlights some of the best mutual funds offered by American Century Investments. In Part 1, we looked at three value-oriented funds that take the cake in their respective categories -- American Century Mid Cap Value (ACMVX), American Century Equity Income (TWEIX), and American Century Value (TWVLX). In Part 2 of this series, we'll turn to one compelling growth-oriented stock option, as well as two selections on the fixed-income side of things.
Investors looking for some growth to power their portfolio might want to look at American Century Growth (TWCGX). This large-cap growth fund has been headed up by managers Greg Woodhams and Prescott LeGard since 1997 and 1999, respectively. While this fund is a consistent large growth offering, it doesn't employ a pedal-to-the-metal growth process. Rather, management utilizes a more moderate approach to growth investing, making valuation an important part of the investment process. As a result, you're not going to see outlandish P/Es in this portfolio.
While the fund boasts a number of "typical" growth stocks with compelling long-term growth prospects in the tech sector such as Apple (NAS: AAPL) , Qualcomm (NAS: QCOM) , and Google (NAS: GOOG) , you'll also find a fair number of more staid consumer names that you might expect to see in a value portfolio. Here, low-priced, dividend-paying names like Coca-Cola (NYS: KO) , PepsiCo (NYS: PEP) , and McDonald's (NYS: MCD) also land in the fund's top 10 holdings.
But don't go thinking this is a confused growth fund -- the investment process is carefully considered and executed, with the solid results to prove it! Over the past decade, the fund ranks ahead of 63% of its competition with a 4% annualized return. That's not too shabby in a time when growth funds have struggled to stay ahead of the broader market.
Unfortunately for those folks who don't already own American Century Growth, you may encounter some difficulty attempting to buy it. American Century closed the fund to new investment a few months ago. So if you're in this fund already, sit tight! If you weren't lucky enough to get in the door, check to see if the fund is available to you through your employer-sponsored retirement plan -- you might still be able to get in that way. Ultimately, you shouldn't expect high-octane growth from this fund, but it should still provide a decent ride for long-term fundholders.
Of course, you can't forget about bonds when building your portfolio, and fortunately, American Century has a few solid choices in that department. One winner here is American Century Inflation-Adjusted Bond (ACITX). This fund sticks primarily to buying Treasury Inflation-Protected Securities (or TIPS), whose principle and interest payments rise or fall depending on the level of inflation in the economy. It's especially important for folks in retirement to have a meaningful allocation to inflation-protected bonds so they can preserve their purchasing power over time. The three-person management team here adds value by keeping expenses low (0.48%) and making small tweaks to the fund's sector allocations. Over time, the fund hasn't dazzled in comparison to its benchmark, but it ranks solidly in the top half of its peer group in the past decade. If you're looking for a low-cost, low-risk bond fund to protect you from the ravages of inflation, American Century Inflation-Adjusted Bond is a solid pick.
Elsewhere in bond-land, American Century Government Bond (CPTNX) is another good option for bond-lovers. Plain vanilla U.S. government and mortgage bonds are the main attraction here, so don't expect fireworks! What you can expect however, is a steady, consistent performer that regularly adds value above and beyond the index. Over the past 10 years, the fund lands in the top 23% of all intermediate-term government bond funds with a 5% annualized return. A reasonable 0.48% price tag has a lot to do with why the fund continues to outperform its peers. The team makes a concerted effort to limit volatility, and that comes across in the portfolio's consistent year-by-year returns -- the fund hasn't lost money in any calendar year since 1999. If you're looking for a down-to-basics government bond fund that can dampen volatility in your portfolio while still delivering solid returns, take a second look at this fine option.
When evaluating individual funds from any fund shop, large or small, remember to focus on the basics -- you want a fund with a consistent investment process over many years, a long-tenured manager or management team, low expenses, and solid performance over both good and bad market environments. Applying these criteria to any fund before you buy it will help ensure you only select the best of the best -- no matter which fund family you currently have under your microscope.
At the time this article was published Amanda Kishis the Fool's resident fund advisor for the Rule Your Retirement investment newsletter. At the time of publication, she did not own any of the funds or companies mentioned herein.The Motley Fool owns shares of Apple, Qualcomm, Google, Coca-Cola, and PepsiCo.Motley Fool newsletter serviceshave recommended buying shares of Apple, Google, Coca-Cola, PepsiCo, and McDonald's, as well as creating a bull call spread position in Apple and a diagonal call position in PepsiCo. Tryany of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.