As markets face rising rates, inflation, and the war in Ukraine, Rene Casis, head of ETF portfolio management at American Century Investments, thinks “there’s multiple different ways… that active management can be very beneficial, particularly in these types of environments.”
“As active managers, we have the ability to contour the portfolio according to our expected return and expected risk perspectives,” Casis told VettaFi Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange. “So, as those perspectives change in response to macroeconomic environments [or] geopolitical risk, we can have the ability to shift our portfolio more defensively.”
Casis added that American Century’s active management team can also “rebalance the portfolio in response to these changes without having to subscribe to a pre-destined date that indices will rebalance with.”
“So, we can be a lot more proactive as the situations change,” Casis said at Exchange: An ETF Experience 2022.
Key Drivers to ESG Investing
When thinking about environmental, social, and governance investing in 2022 and beyond, Casis said that American Century has “identified five themes” that the ETF issuer feels will “be the key drivers to ESG going forward.”
These themes are empowerment (“things that address the flexibility and the empowerment for employees at companies”), sustainability (“the preservation of raw materials and reduction of waste around the food industry”), environment (“enhancing the biodiversity across a variety of species”), digitization (“enhancing cybersecurity”), and healthcare (“specifically, looking at more favorable cost access and innovation”).
Earnings Growth Metrics
Casis also discussed the “variety of different ways” that American Century looks at the earnings growth of companies it invests in and is considering investing in. For example, through its rules-based strategies, the investor is “using a variety of diverse metrics to identify companies that have stable earnings growth over long periods of time.”
And for some of the firm’s “more concentrated active strategies,” American Century continues “to evaluate the balance sheets and earnings for companies to ensure that those companies” it invests in “can withstand these geopolitical shocks, these macroeconomic shocks that we’ve been experiencing.”
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