American Century Multisector Income ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy earns an Average Process Pillar rating.  The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. American Century Multisector Income ETF earns an Average Process Pillar rating.    The leading factor in the rating is the firm's five-year retention rate of 83% over the period. The size of the portfolio management team also supports the process. With four portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 51%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 Compared with other funds in the Multisector Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been underweight AA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AA rated bonds compared with Morningstar Category peers. Additionally, there's been a notable bias away from debt with three- to five-year maturities over the past few years. Similarly, in recent months, the strategy also had less exposure to debt with three- to five-year maturities than peers. Finally, during the past few years, the fund leaned away from securitized debt. In recent months, the strategy also had less exposure to securitized debt compared to its peers.

 This strategy's 12-month yield is 5.4%, which mirrors its average peer. Plus, it has a 5.6% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio holds assets with a higher average surveyed credit quality of BBB, compared with the typical peers' BB, and its non-investment-grade stake is 19% of assets, compared with its average peers' 35%. Lower-credit-risk strategies are often able to navigate bear markets more effectively.

Average

Process

American Century Multisector Income ETF earns an Average People Pillar rating. Jeffrey L. Houston, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.8 stars, demonstrating disappointing risk-adjusted performance compared with category peers. The team boasts an experienced corps of listed portfolio managers, with three others supporting Jeffrey L. Houston. Together, they average 16 years of listed portfolio management experience. As a team, they manage four investment vehicles together, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating the team will struggle to deliver positive alpha in aggregate. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

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 Multisector Income ETF

MUSI seeks to provide a high level of current income via an actively managed broad-based, global bond portfolio without a specific target duration.

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The capital markets are already pricing in rate cuts ahead of 2024, causing yields to fall. One way to continue supplementing income amid a potential drop in yields is to diversify income using a pair of active exchange-traded funds.

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The current market environment continues to throw curve balls when it comes to obtaining yield. That said, a multi-income approach could translate to hits via the American Century Multisector Income ETF (MUSI).

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It has been a tremendous start of the year for actively managed ETFs in 2023, which is cause for celebration. Indeed, this week executives from American Century, a leading manager of active ETFs, rang the closing bell at the New York Stock Exchange.

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At Exchange 2023, American Century Investments' vice president, head of ETF portfolio management Renee Casis, said that the investment firm is focused on the “shifting landscape in the market, both in equities and fixed income.

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Fixed income has been perhaps the big story so far this year in asset management, delivering on the “income” part of the name with very appealing assets on the market.

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Had enough of the volatility so far this year? Just a fourth of the way through 2023, and the compounded challenges of a possible recession, rising rates, and the recent bank crisis have markets and investors looking for solutions.

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There are a lot of investing edicts to be found out there, whether in books, online, financial TV, or just around the proverbial water cooler. Markets would do well to remember one such piece of wisdom right now: “Don't fight the Fed.

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Is it time to dig into fixed income? For the Fed to reach its 2% inflation goal from its rate of 7.7% YOY as of the end of October, it may take a “new normal” of higher rates, even if the Fed does aim for a soft landing.

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After the Federal Reserve raised interest rates by another 75 basis points on Wednesday, the yield on the 2-year Treasury note rose 15 basis points to 4.113%, its highest level since 2007. Meanwhile, the yield on the benchmark 10-year Treasury rose by roughly one basis point to a high of 3.

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Interest rates are pushing higher again after bonds were rallying from a rough first half of 2022, but Federal Reserve chairman Jerome Powell's latest comments on interest rate policy moving forward stifled that comeback. As yields push higher again, consider the American Century Multisector Income ETF (MUSI).

As Yields Push Higher Again, Get Active Income Exposure

One of the enduring pieces of financial advice when it comes to income sources is to treat them like a busy intersection — have multiple avenues at once. One way to follow this advice is to diversify fixed income sources via exchange traded funds (ETFs) like the American Century Multisector Income ETF (MUSI).

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The uncertain bond market is certainly affecting product preference across the board, including passive, income-focused exchange traded funds (ETFs). With rates rising and eroding bond income, passive funds may come out of favor, but that opens the door for active ETFs.

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The war in Ukraine has exacerbated uncertainty over markets, rates, inflation, and commodity supplies. Fahad Kamal, chief investment officer at Kleinwort Hambros, told the Wall Street Journal: “Markets are trying to price something that is basically impossible to price, as part of what's going on in the world depends on Putin's thinking, which nobody knows,” [.

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News for American Century Multisector Income ETF ETF (MUSI)