American Century Focused Dynamic Growth’s strong management team can add value here at the right price. 

This strategy is in the hands of seasoned managers and has a solid supporting cast. Co-lead managers Keith Lee and Michael Li have been running large-growth strategies at the firm going back to the early 2000s and became lead managers here in June 2016. They draw on a veteran comanager, six analysts (some double as managers on sibling strategies), and a quant analyst that have more than 18 years of average industry experience.   

The team has built a holistic approach to uncovering opportunities by running three charges, each offering a different degree of growth exposure. This strategy focuses on high-growth companies surfaced during the team’s industry analysis, which are potential market disruptors and offer rapid growth prospects with a long runway. Yet, this approach reduces the likelihood that the team’s best ideas all make it into one portfolio.

The resulting portfolio is concentrated, holding 30-45-stocks, and displays a high-growth tilt. Accordingly, it hasn’t typically held the Russell 1000 Growth Index’s largest companies like Apple AAPL and Microsoft MSFT. However, the team did recently initiate a position in Microsoft as its artificial intelligence efforts look to drive growth. As of June 2023, the strategy’s 70.8% active share, a measure of differentiation from the index, ranked in the top quintile of large-growth Morningstar Category peers.  

This strategy’s focus on fast-growing companies hasn’t been without risk. Several of the strategy’s most volatile holdings such as electric carmaker Tesla TSLA and payment processor Block SQ helped it deliver top-decile results in 2018 and 2020. However, the market soured on such high-growth fare in 2021 and 2022, and some of those same winners came crashing down, landing it in the bottom quintile of peers. As growth stocks bounced back in 2023, the strategy has performed better, landing in the top half of the peer group through September.     

Overall, the strategy has a fighting chance to add value, at the right price.

Analyst Rating

Veteran leadership deftly steers this volatile strategy.

Senior Analyst

Stephen Welch

NVIDIA

Amazon

Alphabet

Microsoft

salesforce.com

Tesla

Regeneron Pharmaceuticals

Chipotle

Intuitive Surgical

The managers’ need to differentiate this strategy from its siblings can be an impediment at times, and combined with execution missteps, leads to an Average Process rating. 

Keith Lee and his team use the same approach on this strategy as their other charges; however, each of their three offerings exhibit different degrees of growth exposure, which reduces the likelihood that their best ideas all make it into the same portfolio. The emphasis for this strategy, which the team has only run since June 2016, is on finding market disruptors and innovators that are in an early growth stage or have a long runway. The team focuses on finding stocks over $2 billion in market cap with sustainable competitive advantages, a history of high profits, good growth prospects, or improving fundamentals.  

The managers build a high-conviction 30- to 45-stock portfolio with an aggressive growth profile. They take a patient approach and tend to invest for the long haul, but that at times can be a detriment as they might allow a company too much leeway after a material change. For example, as seltzer demand fizzled in 2021, the team was late to trim Boston Beer SAM, which dropped more than 50% from its high. Still, that long-term approach leads to annual portfolio turnover well below the large-growth median, which has ranged between 12% and 29% during the team’s tenure.

Average

Process

The strategy’s experienced, cohesive team earns an Above Average People rating.

Lead managers Keith Lee and Michael Li have a long history of running large-growth strategies. While they have only managed this strategy since June 2016, they have been managing American Century Select TWCIX since 2001 and 2003, respectively. They have also run American Century Ultra TWCUX since 2008. They receive additional management support from Henry He, who became a comanager in June 2016. 

The managers are backed by an experienced crew. Four analysts—some double as managers on other strategies—have been on this team since at least 2013. Their team approach to stock selection fosters a sense of shared ownership and has helped keep personnel turnover in check. In 2022, the team lost its first member in 10 years. Two experienced hires were added that year, one of which has more than 20 years of industry experience. The team is equipped to handle such changes as managers/analysts overlap in coverage and sometimes research ideas outside of their usual sectors, which helps reduce key-person risk. The team also draws on a dedicated quantitative analyst that helps assess risk. 

Most members tend to have hands-on sector experience. For example, Li covers healthcare and previously worked as a pharma scientist. 

The managers invest meaningfully in the fund, aligning their interests with shareholders.

Above Average

People

An evolution is taking hold at American Century, but some pluses and minuses continue, supporting a continued Parent rating of Average.
The firm entered the ETF market in 2019 by launching Avantis Investors, led by former executives from Dimensional, a strong firm that manages semi-passive strategies with value tilts and low fees. Avantis is now running roughly a dozen ETFs with similar features, while American Century’s in-house teams manage another 16 active ETFs. This effort is still fairly new and small as a percentage of assets under management, as most ETFs have been launched since 2019, but they help American Century compete with lower-cost passive and strategic-beta funds.
The bulk of the firm’s assets remain in U.S. mutual funds run by its internal boutiques. The U.S. value team has long been a standout, with tenured, stable management and good long-term results, but other investment teams haven’t produced consistently distinctive portfolios or performance, and some have continued to endure investment-professional turnover.
The firm’s ownership structure is noteworthy and supports a long-term strategy. While the firm has worked with a few large minority shareholders, including current 41% stakeholder Nomura, The Stowers Institute for Medical Research owns 45% of the firm but holds 70% of the equity voting rights. Employees own the rest, which should encourage retention.

Parent

American Century Focused Dynamic Growth ETF

FDG is an actively-managed, non-transparent ETF that invests in a narrow selection of mid- and large-cap growth companies in the US. The fund utilizes the Precidian non-transparent model.

Active ETFs took off in 2023 and, in many ways, had their moment to shine. Given that big step forward, investors may be on the lookout for standouts within the world of active strategies.

The Active Growth ETF Sending a Hot Buy Signal

Active investing took the ETF landscape by storm last year. Investors flocked to active strategies despite their smaller AUM totals.

Active Growth ETF FDG Among Top 10 Mature Performers Over Last Year

The overarching theme in big tech continues to center on the growth mechanism provided by artificial intelligence (AI). Certain exchange traded funds (ETFs) can continue to ride this wave.

Get Big Tech Growth and More With This Active ETF

The growing narrative of artificial intelligence should continue as 2023 turns into 2024. One of the ongoing names to watch is chipmaker Nvidia, which should propel ETFs with exposure to the stock.

AI's Growing Narrative in 2024 Opens Opportunity in Growth ETF

American Century Focused Large Cap Value ETF

American Century Investments has transferred its first two semi-transparent ETFs to hit the market to a new exchange. The American Century Focused Dynamic Growth ETF (NYSE Arca: FDG) and the American Century Focused Large Cap Value ETF (NYSE Arca: FLV) have moved from the Cboe BZX Exchange to the NYSE Arca.

American Century Transfers Debut Semi-Transparent ETFs to the NYSE

Doubleline Shiller Cape US Equities ETF

FMC Excelsior Focus Equity ETF

Vanguard S&P 500 ETF

Vanguard Total Stock Market ETF

Active ETFs have gained in popularity in recent years. However, some pundits have prematurely taken out their shovels for some funds.

Semi-Transparent ETFs Are Alive and Well

American Century U.S. Quality Growth ETF

With the S&P 500 up 16% for the year and the Nasdaq-100 besting that performance with a 40% gain, re-cycling back into growth is an option if an investor feels like turning up the proverbial risk-on dial.

Re-Cycle Back Into Growth With This Active Fund

Avantis U.S. Small Cap Value ETF

American Century Diversified Corporate Bond ETF

American Century STOXX U.S. Quality Value ETF

American Century's ETF operations hit a key milestone last week, surpassing $25 billion in assets under management across the 36 ETFs it markets under its American Century and Avantis brands. The firm first entered the market a little over five years ago.

American Century ETFs Cross $25 Billion Mark

CNN's Fear and Greed Index is pegged into the greedy side of things. This could be a sign investors are ready to dial up the risk and head back into growth.

Ready to Tilt Back to Growth? Consider This ETF

American Century Sustainable Growth ETF

ESG strategies haven't had the easiest go of it over the last several months, with last year a tough one for an increasingly politicized investing thesis. Nor have non-transparent strategies bloomed as some may have thought, with advisors and investors seemingly uninterested overall in guarding daily holdings to prevent possible front running.

What's Driving Returns for This Non-Transparent ESG ETF?

VictoryShares US EQ Income Enhanced Volatility Wtd ETF

Pacer US Cash Cows 100 ETF

VictoryShares US Small Cap High Div Volatility Wtd ETF

Invesco Zacks Mid-Cap ETF

WisdomTree U.S. SmallCap Dividend Fund

Dimensional US Targeted Value ETF

iShares Core Dividend Growth ETF

WisdomTree US Smallcap Quality Dividend Growth Fund

WisdomTree US Quality Dividend Growth Fund

WisdomTree U.S. High Dividend Fund

SPDR Dow Jones Industrial Average ETF

Global X SuperDividend US ETF

TrueShares Low Volatility Equity Income ETF

WisdomTree U.S. LargeCap Dividend Fund

WisdomTree U.S. MidCap Dividend Fund

WisdomTree U.S. Total Dividend Fund

ALPS Equal Sector Weight ETF

Invesco S&P 500 Equal Weight Communication Services ETF

Fidelity Blue Chip Growth ETF

First Trust Morningstar Dividend Leaders Index Fund

Fidelity MSCI Energy Index ETF

First Trust Consumer Discretionary AlphaDEX Fund

First Trust Technology AlphaDEX Fund

This article summarizes the performance of the entire U.S. equity market by examining 1Y, 3Y, 5Y, and 10Y returns for 850+ ETFs across 40 categories. Major indices declined, but investing in Energy, High-Dividend, and Large-Cap Value ETFs softened the blow. Meanwhile, searching for the bottom in mega-cap growth and thematic ETFs didn't work.

U.S. Equity ETFs: The Best And Worst Of 2022

American Century Diversified Municipal Bond

Capital gains season is almost upon mutual fund investors. This is a time when fund managers attempt to give their investors an idea of what their 2022 tax bills may look like by estimating how much their funds will distribute in income and capital gains later in the year.

Consider the Tax Efficiency of ETFs During Capital Gains Season

As inflation continues to remain stubbornly high, the Federal Reserve seems determined to continue raising interest rates to bring it down. This is causing banking chiefs to warn that a recession is nigh.

Amid Stalled Growth, Use FDG to Target Companies With Long-Term Growth Potential

Investors should consider an exchange traded fund strategy that can adapt to the ever-changing market environment. In the recent webcast, An Advisor's Guide to Discovering Transformational Companies, Kevin Lewis, vice president and senior client portfolio manager at American Century Investments, noted that growth as a characteristic has underperformed recently after years of outperformance.

An ETF Strategy to Capture a Return to Growth

The markets are always shifting with new trends, providing adept investors the opportunity to capitalize on the changes.

An Advisor's Guide to Discovering Transformational Companies

Active large-cap domestic equity managers have been proving their worth thus far this year, with nearly half (49%) of such funds outperforming the S&P 500 in the first six months of 2022. Meanwhile, the S&P 500 fell 20% on a total return basis during the same period, according to S&P Dow Jones Indices.

Target U.S. Large-Caps With These Active ETFs

Are growth stocks back? New data suggests that, after falling out of favor with investors earlier this year, growth stocks have rebounded.

Could Growth Stocks Be Making a Comeback?

Nvidia Corp.'s share price dropped after the Santa Clara, CA.-based chip maker warned that its second-quarter sales would be far lower than its previous forecast.

Invest in Some Quality Growth Funds (Like Nvidia) With These ETFs

The downward pressure on the S&P 500 is giving growth investors more headaches than purveyors of value. That said, if a market recovery can happen soon, investors may want to get a head start on growth.

Get a Head Start on Growth With a Touch of Value in This ETF

American Century Quality Diversified International ETF

Avantis Responsible International Equity ETF

American Century Multisector Income ETF

When trading ETFs, there are many criteria to consider, such as the use of limit orders, market volatility, when to trade if the underlying markets are closed, and the liquidity of the ETF. Advisors typically look at the on-screen liquidity, which is gauged by its average daily volume (ADV).

Using a Block Desk for Large Trades

American Century Sustainable ETF

Nuveen Growth Opportunities ETF

T Rowe Price Blue Chip Growth ETF

T Rowe Price Dividend Growth ETF

T Rowe Price Equity Income ETF

They're not really living up to their hype … yet.

Nontransparent Active ETFs Slow To Gain Traction

Growth stocks and related exchange traded funds rallied on Tuesday after the latest inflation data revealed that consumer prices were largely in line with expectations. Growth stocks rebounded after taking a beating in the previous session in response to a spike in Treasury yields on expectations of an aggressive U.S. Federal Reserve monetary policy outlook [.

Growth Stock ETFs Rally, Brush Off Inflation Data

Investors are becoming more comfortable investing in actively managed ETFs. Data from FactSet show that of the $7.12 trillion in assets under management within exchange-traded funds, 4% are in actively managed ETFs as of March 31.

Advisors Gain Comfort with Active ETFs

SmartETFs Asia Pacific Dividend Builder ETF

ProShares Bitcoin Strategy ETF

SmartETFs Dividend Builder ETF

SPDR Bloomberg High Yield Bond ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

Vanguard Intermediate-Term Corporate Bond ETF

BondBloxx USD High Yield Bond Energy Sector ETF

In the last nearly 800 days, the growing number of advisors that incorporate ETFs into their practice have only been able to digitally learn what makes one product different from another. But next week, that will end, as many descend to Florida for Exchange, An ETF Experience.

Recapping Key Milestones Before Next Week's Exchange Conference

Active managers resisted launching ETFs for years due to concerns that disclosing their holdings daily would reveal their trade secrets. So, the year after the Securities and Exchange Commission approved non-transparent funds, American Century Investments launched two active, semi-transparent ETFs: the American Century Focused Dynamic Growth ETF (FDG) and the American Century Focused Large Cap Value [.

News for American Century Focused Dynamic Growth ETF ETF (FDG)