The Return of American Century Legacy Large Cap
By
Jennifer Schonberger, Staff Writer, Kiplinger's Personal Finance,
Source: Kiplinger Consumer News Service
From the mid 1970s through the 1990s, American Century was one of the nation’s top growth-stock managers. Led by its Growth, Select and Ultra funds, the firm, formerly called 20th Century, pioneered a form of investing that identified companies with accelerating profits and rising share prices. Like many others, the funds crashed when the tech bubble burst in 2000. Managers subsequently toned down the funds’ aggressiveness, but performance was tepid over the past decade, and investors withdrew billions.
SEE ALSO: How to Find Attractive Value StocksBut American Century is back in the limelight with a fund launched in 2006. Legacy Large Cap uses a mathematical model to rank large companies based on 18 criteria, including the rate of earnings growth and the price-earnings ratio. After a computer does its thing, the managers run a second screen to rank the stocks for risk and make sure that the fund’s sector weightings are in line with those of its benchmarks. The fund re-ranks and rebalances its holdings weekly. “That’s been helpful this past year when the market changed its mind on the turn of a dime,” says John Small Jr., one of the managers. A similarly run but more concentrated fund, American Century Legacy Focused Large Cap (ACFOX), just missed making the top ten in the large-growth category.
Although both funds delivered strong results over the past year, their longer-term records have been uneven. After they beat the market in 2007, both trailed in each of the next three years. All contents copyright 2012 The Kiplinger Washington Editors, Inc.
All contents copyright 2012 The Kiplinger Washington Editors, Inc.