American Century Quality Cnvtbl Scts ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The fund 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 investment process evaluation looks for strategies with a philosophy distinctive enough to generate excellent results in the future. American Century Quality Cnvtbl Scts ETF earns an Average Process Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 83% over the period. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also strengthen the process. The pattern of low fees at the firm suggests that it is focused on delivering strong results for investors. 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.

The investment strategy as stated in the fund's prospectus is as follows: 

The investment seeks total return.  Under normal market conditions, the portfolio managers will invest at least 80% of the fund's net assets, plus any borrowings for investment purposes, in convertible securities. Convertible securities have characteristics similar to both bonds and common stocks and typically consist of debt securities and preferred stocks that may be converted into or exchanged for a prescribed amount of common stock or other equity security, of the same or a different issuer, within a particular time period, and at a specified price. The fund may invest in high-yield securities. It is non-diversified.  

 American Century Quality Cnvtbl Scts ETF is currently in the Convertibles Morningstar Category.The strategy owns 108 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 22.6% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 68.9% average.  And, in terms of portfolio turnover, looking at year-over-year movements, 46% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

American Century Quality Cnvtbl Scts ETF earns an Average People Pillar rating. Rene P. Casis, the longest-tenured manager on the strategy, boasts 13 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 3.7 stars, demonstrating above-average risk-adjusted performance versus category peers. The team is small but adequately equipped, with only one other supporting manager. Together, the two listed managers have nine years of average listed portfolio management experience. As a team, they manage two investment vehicles together, with an asset-weighted average Morningstar Medalist Rating of Neutral. This means, in aggregate, the team falls short and will struggle to produce positive alpha. The highest personal investment by either manager is less than $10,000. That is too low to promote alignment of their interests with the fund's investors. 

 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 Quality Convertible Securities ETF

QCON is actively managed to provide an investment portfolio of US convertible securities, of any credit quality, using a proprietary screening method.

Not much is working in the bond market this year, and the same is certainly true of equities, so there's no getting around the fact that hybrid securities are scuffling, too. That's the case with convertible bonds, which are perhaps the most equity-like bonds available.

Convertible Bonds Could Be Value Opportunity

Income-minded investors should consider the benefits of preferred securities and convertible bonds exchange traded fund strategies to bolster their after-tax income. In the recent webcast, Diversify Your Income Sources: The Best Kept Secret in Portfolio Construction, Sandra Testani, vice president of ETF product and strategy at American Century Investments, explained the benefits of preferred stocks, [.

Why Income Investors Should Consider Convertible Bonds, Preferreds ETFs

As traditional fixed income assets suffer the brunt of a more hawkish Federal Reserve policy outlook, advisors should consider alternative ideas to generate yield and better diversify their risk exposure. In the upcoming webcast, Diversify Your Income Sources: The Best Kept Secret in Portfolio Construction, Sandra Testani, vice president of ETF product and strategy at [.

Diversify Your Income Sources: The Best Kept Secret in Portfolio Construction

Historically, convertible bonds — corporate debt that converts to common equity in the underlying issuer upon maturity — are among the best-performing fixed income assets when rates rise. That trend isn't holding up this year, and it's easy to understand why.

Convertible Bond Drubbing Could Spell Opportunity With This ETF

The Federal Reserve's interest rate hiking regime is punishing a variety of fixed income assets, but some bonds have track records of standing tall against rate increases. That's the reputation of convertible bonds, indicating that the American Century Quality Convertible Securities ETF (QCON) is among the fixed income exchange traded funds that investors might want [.

Bullish Call on Convertible Bonds

On Wednesday, the Federal Reserve raised interest rates by 25 basis points in the first of what could be as many as six rate hikes this year. Predictably, advisors and investors are looking to embrace fixed income assets that aren't negatively correlated to rising rates.

This Bond ETF Could Be Ideal Inflation Hedge

The Federal Reserve is likely to raise interest rates this month, and many fixed income investors are concerned about that now-telegraphed move, but it pays to remember that not all bonds suffer as the Fed tightens. For example, convertible bonds have an established history of proving durable against the backdrop of rising rates.

Consider QCON as Rates Rise

With interest rates set to rise this year, likely multiple times, some fixed income investors are pondering where to turn. For bond investors, the good news is that not all corners of the fixed income universe lag when the Federal Reserve tightens rates.

Good Time to Consider Convertibles

The consumer price index increased 6.2% in October, the highest it has been since December 1990, and core inflation, minus food and energy prices, surged 4.6% in its most rapid gain since 1991, reports CNBC. Prices across all sectors are soaring, with fuel oil prices growing 12.3%, adding up to a 59.1% increase for the entire [.

QCON Hedges Against Historic Inflation With Convertible Bonds

Exchange traded fund investors should explore alternate strategies for a market that is stretching valuations to precipitous levels. In the recent webcast, Afraid of a Market Pullback?

Prepping for a Pullback? Alternative ETFs for Troubled Times

The economy has staged an impressive comeback from last year's drop, even fueling concerns that the market at large is overvalued. Forward-thinking investors may want to consider hybrid approaches.

News for American Century Quality Convertible Securities ETF ETF (QCON)