American Century Divers Muncpl Bd 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 cheapest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in A rated bonds and has an overweight in debt with 15- to 20-year maturities compared with category peers. 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 evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. American Century Divers Muncpll Bd ETF earns an Average Process Pillar rating.    The main driver of the rating is the fund's strong long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The firm's five-year retention rate of 84% also supports the process. 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 beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 Compared with other funds in the Muni National Interm 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 category average, the managers have been substantially underweight A rated bonds in recent years. In the latest month, the strategy has also relatively underweighted A rated bonds compared with Morningstar Category peers. Additionally, there's been an overweight position in debt with 15- to 20-year maturities over the past few years. Compared with category peers, the strategy had more exposure to debt with 15- to 20-year maturities in the most recent month. Finally, during the past few years, the fund leaned away from corporate bonds. Nevertheless, the fund's corporate bonds exposure was in line with peers in the latest month.

 This strategy has a 3.0% 12-month yield, higher than its average peer's 2.8%. In addition, it has a 3.4% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). While a higher yield may deliver more income, it also tends to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

Average

Process

American Century Divers Muncpll Bd ETF earns an Average People Pillar rating. Joseph Gotelli, the longest-tenured manager on the strategy, boasts 18 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 3.3 stars, demonstrating above-average risk-adjusted performance compared to category peers. Joseph Gotelli has an experienced listed co-manager. Together, they average 18 years of listed portfolio management experience. As a team, they manage five investment vehicles together, with mixed prospects. The asset-weighted average Morningstar Medalist Rating across the strategies is Neutral. This means, in aggregate, they are not positioned to deliver positive alpha. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy'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 Diversified Municipal Bond

TAXF is an actively managed portfolio of US municipal bonds. The fund seeks current income that is exempt from federal taxes.

Avantis Core Municipal Fixed Income ETF

The Federal Reserve standing pat on interest rates for the time being leaves the window open for fixed income investors to take advantage of current yields. That also includes muni bond exposure, but investors may want to take advantage before that proverbial window shuts.

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The anticipation of lower interest rates in the new year could bring a flash flood of new municipal bond issuance, according to Bond Buyer. If yields continue to fall and bond prices rise, it might be an opportune time to get muni bond exposure via two ETFs from American Century.

Rise in Muni Bond Issuance in 2024 Throws Spotlight on 2 ETFs

History tends to repeat itself and if that's the case in the current economic environment, then investors may want to side with muni bonds. American Century offers a pair of attractive, low-cost exchange traded fund options that allow for this exposure.

It's an Ideal Time for Muni Bond Exposure With These ETFs

In a macroeconomic environment subjected to rising yields, muni bonds can offer both yield and the stability of quality debt. Furthermore, both are achievable using one exchange traded fund: the American Century Diversified Municipal Bond ETF (TAXF).

Stability and Yield Are Achievable With This Muni ETF

Fixed income investors experienced the pull of rising yields during the first half of 2023, which included attractive options within the municipal bond market. “With the highest yields in years, the muni bond market looks increasingly attractive,” an AllianceBernstein blog post noted.

Rising Yields Are Making Municipal Bonds an Attractive Option

With the ongoing capital markets discussion on inverted yield curves, the threat of a recession still looms. Fixed income investors need not fret, however, if they consider the right exposure — one option being municipal bonds.

Amid Recession Fears, Get Municipal Bonds Exposure

Investors may be looking at tax season in the rearview, but that's no excuse to ignore taxes all year. As discussed in previous coverage of advisors' tax considerations, factors like the “January Effect” require tax attention.

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Tax season is well and truly upon us, and while ETF taxes may be front of mind at the end of the calendar year, April's tax season should be a powerful reminder of the power of ETF tax efficiency.

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Spring is just around the corner, and with it comes a much less exciting event — tax season. Still, advisors have to be aware of the best ways to mitigate the impact of the tax bill for clients, whether in the near term or looking ahead to the end of 2023 itself.

Tax Season Offers Reminder to Try Diversified Muni Bonds

As though rising rate volatility and recession fears weren't concerning enough for investors, the last week's bank run drama and instability has all eyes on the risk of contagion to the broader economy.

Credit Backdrop Adds to Muni ETF Appeal Amid Bank Drama

Bonds that offer high yield and can ward off the threat of a potential recession offer fixed income investors an attractive option. Right now, they can get that duality in municipal bonds.

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Tax season is just around the corner, and government dues could well be on investors' minds — almost as much as the Fed's ongoing interest rate hikes and the recession they could induce. Suffice to say, there are a lot of open questions in the market right now.

Tax-Free Muni ETF TAXF Can Ride Muni “Renaissance”

As we consider the macroeconomic outlook, fixed income investors can find opportunities in the municipal bond ETF market during these unprecedented times.

An Active Municipal Bond ETF Approach for Fixed-Income Investors Seeking Quality

Municipal Bond investors are facing many challenges today from elevated inflation and a Federal Reserve well into a tightening cycle, to significantly negative total returns year to date. Investors may feel inclined to shy away from fixed income during these periods because of the recent drawdowns in total returns.

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It's that time of year again, as firms start to share their estimated cap gain distributions for their ETFs.

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The partisan swing – or lack thereof – in last week's midterm elections dominated the news, but investors may also want to note the significant investment in municipal bonds voters made.

Watch Midterm Muni Bond Boom in TAXF

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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.

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Investors appear to be finally accepting the idea that the Federal Reserve will raise interest rates into restrictive territory and remain at that high rate for a while. Results from a recent survey by CNBC show that the average respondent believes the U.S.

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While the key benefits of exchange traded funds such as lower costs, trading flexibility, transparency, and tax efficiency are known to many investors, not everyone is aware that ETFs also may help reduce tax bills through a strategy called tax-loss harvesting.

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Inflation fears may have dissipated in July, but the recession narrative is growing. As such, investors are focusing on bonds once again as a safe haven escape if economic growth suffers from rising interest rates.

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Yields on U.S. Treasury yields rose sharply Friday morning after the jobs report suggested the economy might not be cooling as fast as investors had assumed. The yield on the benchmark 10-year U.S. Treasury note was 2.801%, according to Tradeweb, up from 2.674% Thursday.

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For the first half of 2022, bonds have been seemingly in lockstep with stocks as inflation fears applied selling pressure on debt markets as the U.S. Federal Reserved hiked rates. Now, investors are returning to bonds, giving prospective investors an opportunity to reallocate capital into fixed income again.

2 Options as Investors Pour Capital Back Into Bonds

Municipal bonds were one of the highlights of the bond market during the height of the pandemic with their attractive yields and tax benefits. Enter 2022, and they've followed the rest of the debt market downward, but that could be changing.

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Fixed income served as a strong diversifier in times of equity drawdowns over the past two decades — see the dot-com bubble and burst of the early 2000s and the global financial crisis of 2008.

News for American Century Diversified Municipal Bond ETF (TAXF)