Press Release – KANSAS CITY, Mo., Oct. 3, 2016 – American Century® Sustainable Equity Fund (AFDIX), formerly known as American Century Fundamental Equity Fund, has been awarded a “high” Morningstar Sustainability Rating™, a distinction assigned to the top 10 percent of funds within each Morningstar category. The portfolio’s rating now ranks in the eighth percentile of the Large Blend* peer group. Sustainable Equity recently underwent changes in its investment process to better integrate environmental, social and corporate governance (ESG) considerations.
There is growing recognition among investors that performance objectives can be met while pursuing social goals, according to American Century Investments Co-Chief Investment Officer Victor Zhang. “We understand that integrating ESG considerations with traditional financial information may provide a more comprehensive view of the value, risk and return potential of a security,” Zhang said.
The Sustainable Equity Fund uses a process designed to deliver competitive long-term financial results alongside positive impacts to the environment, communities and corporate governance. The investment team validates the sustainability of the business improvement and the materiality of the ESG attributes, leveraging the fundamental insights of American Century Investments’ portfolio managers and analysts.
The portfolio is constructed from the bottom up to ensure stock selection is the primary driver of excess return and risk. The portfolio managers intentionally seek companies with improving business fundamentals and favorable ESG characteristics, while minimizing exposures to unintended risks such as sector or industry changes. Portfolio holdings are continually monitored and evaluated on both financial and ESG criteria.
“We believe that companies exhibiting both improving business fundamentals and sustainable corporate behaviors will outperform over time,” Zhang said.
ESG mutual funds fall into the category known as “impact investing,” which in the broadest sense encompasses investments that have a measurable, beneficial impact on society, while also providing investors with a potential return. Similarly, American Century Investments views its unique ownership model and the legacy of its founder as the ultimate example of investing with impact. American Century Investments’ late founder James Stowers, Jr. and his wife, Virginia, transferred their equity ownership stake in American Century Investments to the endowment supporting the Stowers Institute, which has resulted in more than 40 percent of the global asset management firm’s annual dividends being directed toward medical research. Since 2000, more than $1.2 billion in dividends have been distributed to the Institute.
Sustainable Equity is co-managed by Greg Woodhams, CFA; Justin Brown, CFA; Joe Reiland, CFA and Rob Bove. The fund has $221.6 million in assets under management as of September 9, 2016.
Woodhams is a chief investment officer, senior vice president and senior portfolio manager; he has worked in the financial industry since 1981 and joined American Century Investments in 1997. He serves as a member of the Investment Oversight Committee, Products & Markets Committee and the Investment Management Senior Leadership Team. Previously, Woodhams was vice president and director of equity research at Texas Commerce Bank. He holds a bachelor’s degree in economics from Rice University and a master’s degree in economics from the University of Wisconsin at Madison. He is a CFA® charterholder.
Brown is vice president and portfolio manager, and prior to joining American Century Investments in 2000, he was an equity analyst for USAA Investment Management. He has worked in the financial industry since 1993. Brown received a bachelor’s degree in business administration and finance from Texas Christian University and is a CFA charterholder.
Reiland is vice president and portfolio manager; he joined American Century Investments in 2000 and has been in the financial industry since 1995. Previously, he was an equity analyst for Commerce Bank. Reiland received a bachelor’s degree in business administration from Washington University. He is a CFA charterholder.
Bove is a portfolio manager and joined American Century Investments in 2005. Previously, he was with United States Trust Company as a research analyst and vice president in the equity research department covering specialty pharmaceutical, biotechnology and medical supply companies. Prior to that, Bove was a senior accountant at Deloitte & Touche in Parsippany, N.J. He graduated cum laude from Villanova University with a bachelor’s degree in accountancy. He also holds a master’s degree in business administration from New York University.
About American Century Investments
American Century Investments is a leading privately held investment management firm, committed to delivering superior investment performance and building long-term client relationships since its founding in 1958. Serving investment professionals, institutions, corporations and individual investors, American Century Investments offers a variety of actively managed investment disciplines through an array of products including mutual funds, institutional separate accounts, commingled trusts and sub-advisory accounts. The company’s 1,300 employees serve clients from offices in New York; London; Hong Kong; Mountain View, Calif.; and Kansas City, Mo. Jonathan S. Thomas is president and chief executive officer, and Victor Zhang and David MacEwen serve as co-chief investment officers.
Delivering investment results to clients enables American Century Investments to distribute over 40 percent of its dividends to the Stowers Institute for Medical Research, a 500-person, non-profit, basic biomedical research organization. The Institute owns more than 40 percent of American Century Investments and has received dividend payments totaling over $1.2 billion since 2000. For more information about American Century Investments, visit americancentury.com.
*Out of 636 Large Blend funds as of 7/31/2016. Based on 98 percent of AUM.
Sustainability Score as of 7/31/2016. Sustainability Rating as of 7/31/2016. Sustainalytics provides company-level analysis used in the calculation of Morningstar’s Sustainability Score.
The Morningstar® Sustainability Rating is intended to measure how well the issuing companies of the securities within a fund’s portfolio are managing their environmental, social, and governance (“ESG”) risks and opportunities relative to the fund’s Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics1 receives a Morningstar® Portfolio Sustainability Score™.
The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior.
The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund’s rank within the following distribution: High (highest 10%); Above Average (next 22.5%); Average (next 35%); Below Average (next 22.5%); Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. Past performance is no guarantee of future results.
1 Sustainalytics is an independent ESG and corporate governance research, ratings, and analysis firm and is not an affiliated company of Morningstar.
This article was originally published here.
