American Century Mutual Funds Review
Since October 1993, this investor has used American Century to create a portfolio that met the goals and needs over the years. In the beginning the investor chose the Ultra Fund, which is a more aggressive fund with an expense ratio today of 1.01%. The client was younger and had a good income with job security. At that time 100% of the assets in the portfolio went into this fund. The Ultra Fund invested in long term capital growth by investing in larger United States companies that led the industry in both sustainable and accelerated earnings. Its short-term price presented more volatility than other funds. Fees of $10.00 annually were charged for maintenance on this all IRA funds in the beginning until the amount was over $10,000. It is currently $12.50 for the same condition.
In February of 2007, the investor went through a divorce and was awarded money from a 401K which was rolled into the Ultra Fund. Feeling less stable with life, the investor moved from the Ultra Fund to the One Choice Moderate portfolio which was also was assigned 100% of the assets with 64% in Stock Funds, 31% in Bond Funds and 5% in Money Market Funds. This fund demonstrated less volatility though it was more conservative and diverse than his previous fund choice.
More specifically, the Stock Funds in this portfolio currently include Equity Growth 11%, Large Company Value 8.50%, Growth 7%, International Growth .50%, Heritage 5%, NT International Value 5%, Core Equity Plus 4%, Emerging Markets 4%, NT Disciplined Growth 2%, Small Company 2%, NT Global Real Estate 2%, and NT International Small-Mid Cap 1.50%. These are all Investor Class.
The Bond Funds include Diversified Bond 15%,
Inflation-Adjusted Bond 6%, Global Bond 5%, High Yield 3%, and International Bond 2%. These are also Investor Class.
The only Money Market Fund is a Prime Money Market 5% which is also Investor Class.
American Century will, if the interest rates are low for money market funds, move the investment in from these money market funds to short-term
bond funds. According to American
Century’s website, the original neutral money market fund mix includes equity securities at 25%, fixed-income securities at 52%, and cash
equivalents at 23%. All changes are listed in the prospectus.
The rollover in 2007 is the only time this investor added outside money. The only other investments have come from dividends. At the time of rollover deposit, the cost of the Ultra Fund share was at $28.00. At the time of the exchange from the Ultra Account to the Moderate Portfolio, the cost of shares in the Moderate Portfolio were $12.40. There has been no withdrawal from this IRA at any time since its inception.
Since the change to the Moderate Portfolio in 2007, at a cost of $12.40/share this portfolio dipped to its lowest point in March, 2009 to $8.25/share. That share price has gradually increased to where it is currently, at $15.59/per share.
The average annual return since February of 2007 is 5.78%. In the past twelve months this Moderate Fund Portfolio had a 6.69% return and the year to day return is 3.37%. The market change/adjustments, which is the difference between beginning and ending values, minus investments, plus withdrawals is +827.76.
Had this investor remained with the Ultra Fund where the share price has risen over 11% to $37.16 since its origin in 1983, compared to the Moderate Fund at just below 7% since inception in 2004 a higher return would have been realized. Morning Star has rated the 10 year return on the One Choice Moderate fund at 4/5 stars and Lipper ratings at the 10 year return mark rates this fund with 75/308.
Distribution of the American Century Moderate Funds are made quarterly and the most recent report noted a distribution of $0.0305, with a total expense ratio of .86%. Returns that demonstrate fund performance are +3.79% in 2005, +10.05% in 2006, -16.03% in 2008, +15.81 in 2009, with a low of +3.76% in 2011, then back up to 10.31% in 2013.
According to the prospectus of the Moderate Portfolio Fund, the Federal cost of investments from taxes was $1,209,974,533. Gross tax of appreciation of investments for the same time period was $282,825,334, and gross tax of depreciation of investments was (1,372,054). The net tax overall for the year was listed at $281,453,280.
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The yield of the Moderate Portfolio Fund to date is +1.28%, in 2012 it was 13.23%, in 2013 16.04%, and in 2014 it was 6.98%. The Expense Ratio is .86%.
This investor finds that American Century has an excellent web site that offers information on investment, college saving plans, retirement, IRS laws, and current market status. There are clear explanations, all terms are defined and contact information is detailed. The site shows the investors who work with each account, their personal phone numbers, e-mail, photo and information about their qualifications. Their reports are complete enough for the simple investor with connections for more in depth explanations at a click of the mouse. In other words the positive aspect of American Century is having information that is readily available, easily understood, with personnel who can be reached without difficulty.
The web site is professional, linked to other information that you may need to refer to and of course contains a blog where an investor can read about current trends, new laws, or other timely topics.
It is apparent, according to the investor interviewed, that American Century has done a great job moving into the technical age efficiently while keeping their
investors informed. The brokerage firm lacks for nothing that has to do with finances and investing. It offers a complete host of services that educate, encourage financial stability, and guide people of all ages to set and meet financial goals.
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