Two strategies from American Century Investments just celebrated their fifth birthdays in January, with the pair poised to help investors through a complicated 2023. The five-year ETF mark may not be as key of a milestone as the three-year mark for flows, but for the American Century STOXX U.S. Quality Value ETF (VALQ) and the American Century Diversified Corporate Bond ETF (KORP), it’s a milestone worth looking at for investors.
The pair both launched midway through January 2018, admittedly a very different world from 2023, and have certainly put in the hard performance yards to make their mark. KORP has outperformed its ETF Database category average and its FactSet segment average over the last five years, returning 7.3% in that time compared to 4.7% and 2.4%, respectively. The strategy has also added a solid $192 million in net inflows since inception.
VALQ, meanwhile, outperformed the two averages even further, according to VettaFi, with its whopping 37% return over the last five years far outpacing the ETF Database category average’s 22.1% return and the FactSet segment average’s 19% return in that time. The ETF also added $165 million over the last five years in net inflows.
The pair presents interesting options for investors in a 2023 marked by continued Fed-related volatility and the risk of a recession later in the year. VALQ tracks the iSTOXX American Century USA Quality Value Index, looking for undervalued large-cap firms with quality fundamentals. VALQ aims for 30% to 80% of its portfolio in value with 30% to 65% in sustainable income stocks.
2023 has already seen value get its moment, with a value factor perhaps even more advantageous than a simple buy-low mentality, thanks to factor investing taking a more systematic approach. Charging 29 basis points, VALQ has returned 8% over the last three months.
KORP, meanwhile, could be well positioned for the return of income to fixed income, with the five-year ETF mark a happy moment for bonds to reemerge. KORP has outperformed its own averages over the last five years with a return of 7.3% in that time, having added $191 million. Corporate debt could be poised for a “once-in-a-decade-opportunity” this year and merits a close eye.
The five-year ETF mark is a major milestone for the ETF duo, and could be a platform for further progress. As such, investors looking for two seasoned strategies would do well to track VALQ and KORP over the next few weeks.
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