Nearly three years to the day from the launch of its first exchange traded funds (ETFs), American Century Investments has rolled out the global asset management firm’s first actively-managed low-volatility ETF (LVOL), listed on the New York Stock Exchange (NYSE) Arca. Designed for investors seeking capital appreciation, LVOL, with a total expense ratio of 0.29 percent, will disclose its holdings daily.
“We have the opportunity to offer an ETF that has the objective of tempering volatility using our proprietary active methodology,” says Ed Rosenberg, head of ETFs for the firm. “Because LVOL is actively managed, it will enable a nimble approach that can adapt to quantitative insights and challenging market conditions.”
American Century Low Volatility ETF’s managers use quantitative models to select securities with attractive fundamentals that they expect will provide returns that will reasonably track the market over the long term, while seeking less volatility.
According to Rosenberg, the LVOL portfolio managers aspire to deliver market returns in normal markets while losing less in drawdowns by correcting for the shortcomings of low-volatility indexes. “We’re emphasising strong fundamentals in an effort to limit potential risk of speculative companies with questionable profits,” he says. “We’re also expanding risk measures beyond volatility to capture other downside and balance sheet risks while focusing on volatility at the portfolio level as well as the individual stock level.”
The fund is comanaged by Steven Rossi, CFA; Tsuyoshi Ozaki (both of Disciplined Equity team) and Rene Casis. Rossi joined American Century from RS Investments in 2016, Ozaki from Axioma Inc. in 2017 and Casis from 55 Institutional, and BlackRock prior to that, in 2018.
The launch of LVOL rounds out a successful three-year period for American Century’s ETF business.
“Since the launch of our ETFs, American Century has been one of the fast-growing new entrants into the ETF space,” says Rosenberg. “We’ve raised more than USD3.5 billion since 2018.” (American Century and Avantis Investors ETFs combined.)