The ETF ecosystem grows day by day, spiking in recent years with serious inflows and many new active ETF launches. American Century Investments has added to the active ETF pool with its latest launch — a fund targeting the securitized credit ETF space.
Key Takeaways:
- The ETF ecosystem has bloomed as active ETFs have proliferated, with American Century Investments adding the latest to that pile.
- The firm’s new active securitized credit ETF aims to provide both income and notable diversification in the securitized debt space.
- Adding such a fund to a portfolio could boost durability and adaptability as inflation and higher rates both loom.
The shop — which holds $300 billion in AUM according to a recent release — has now added the American Century Securitized Credit ETF (ASEC) to its increasingly significant fixed income suite. The new fund actively invests in what the firm coined as "underrepresented” asset-backed securities and other securitized subsectors. Combined, the strategy aims to complement core bond holdings with high income and added diversification.
As a securitized credit ETF, ASEC focuses on non-traditional U.S. securitized debt securities. That said, it can invest in residential and commercial mortgage-backed securities as well as collateralized loan obligations (CLOs). The strategy will be co-managed by senior portfolio manager Paul Norris and portfolio manager Michael Waggaman.
“Investors seeking income and diversification are looking beyond traditional corporate credit and we’re eager to provide a low-cost offering that applies our active management expertise to high-quality securitized credit through a disciplined process,” Norris said, per the release.
“ASEC pairs fundamental expertise with proprietary analytics and active risk management in an effort to capture market inefficiencies and offer a differentiated return profile, positioned to outyield similarly rated corporates while maintaining lower duration and strong credit quality,” he added.
See more: This Income ETF Specifically Addresses Rising Interest Rates
The move adds to the firm’s fixed income suite, which includes funds such as the American Century Diversified Corporate Bond ETF (KORP ). Now holding just over $800 million in AUM, KORP offers an active approach to corporates — another area that may hold promise this year.
With the debut of ASEC, American Century makes a compelling case for the value of active management in the securitized credit space. The ETF’s goal of providing income while also offering active adaptability could make it a strong consideration for adding durability and some verve to fixed income.
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