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American Century Investments | Best US Fixed Income ETF Issuer ($100m-$1bn)

American Century’s Ed Rosenberg, Senior Vice President, Head of Exchange Traded Funds, believes that the firm’s dedication to enhancing its fixed income offering in ETFs, and how they manage the products is what lies behind their win this year.

“People are recognising that they are unique products in the space,” he says. “It’s something unique and that can add value to the portfolio. Depending on the category of fund, when you break down the fixed income market each has its own unique challenges.”

This year has posed a number of challenges to active investors in bonds, with the Bloomberg Aggregate Index suffering its worst year ever in the first six months. “This environment shows unique challenges,” Rosenberg says. “As an active investor, you have to react to them before they come to fruition. Because the portfolio managers are active in what they do, it allows the funds and the clients in them to know they are watching over them.”

Rosenberg says that the range of fixed income products at the firm allows them to offer portfolio managers the ability to shift duration. “They aren’t shifting far form the core,” he says. “When the market fell, they moved back to the neutral position and are looking for value, constantly tinkering looking for value in bonds.”

There has been more demand for fixed income, because of the yield. The firm’s diversified Muni Bond product TAXF has increased assets by a third year to date.

There are assets of USD500 million in fixed income ETFs at American Century, and the firm has just launched three new products in the last four weeks with a short duration strategic income product SDSI its most recent. The firm now has 35 ETFs and having only launched its first ETF five years ago, they now represent 7 per cent of the USD14 billion firm’s assets.

Target audience for the American Century fixed income ETF range is existing clients of the firm, but also new users, who might have a different profile, Rosenberg says.

“We have advisers who use only ETFs and those who use some ETFs – the numbers are growing as adviser sprinkle in ETFs.

“We are an active management shop that offers a range of investment vehicles. With the continued popularity of ETFs, we have brought our active fixed income expertise to the market as an ETF to further align our offering with client’s needs,” says American Century CO-CIO, Fixed Income Charles Tan.

Rosenberg notes that there is also increased competition for client money from model portfolios and robo-advisers. “Advisers are always going to have to adapt their model to create value for the investor,” he says.

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