On Thursday, American Century Investments launched the American Century California Municipal Bond ETF (CATF ).
With a net expense ratio of 0.27%, CATF is an actively managed fund. For investors, the fund aims to provide strong levels of current income, exempt from both federal and California income taxes.
“American Century has managed municipal bonds for California investors for over 40 years and we’re excited to leverage our deep history in California-specific strategies across the investment grade and high yield markets with the launch of CATF,” noted Joe Gotelli, Senior Portfolio Manager and Municipal Markets team head for American Century. “We are driven by the needs of our clients and eager to provide an offering to California residents that takes advantage of opportunities across the credit and duration spectrum.”
California Dreamin'
Primarily, CATF invests in California municipal and other debt securities. The wide majority of fund investments target assets with interest exempt from federal and California income taxes. However, the fund prospectus notes that some muni investments are not exempt from federal alternative minimum tax.
While the fund focuses assets on investment-grade options, CATF may also utilize high-yield debt securities. It may also consider unrated securities for inclusion, should the investment meet the fund’s objectives.
In regard to asset duration, CATF reserves the right to invest in securities regardless of maturity or duration. The fund’s average duration will vary depending on how the portfolio managers wish to navigate upcoming interest rates.
“CATF is a natural extension of our municipal bond offerings and complements our existing ETF, American Century Diversified Municipal Bond ETF (TAXF ),” added Gotelli. “It utilizes the same team, philosophy and process that we employ across our California mutual funds with the benefits of the ETF vehicle.”
American Century currently has over 45 different ETFs listed in the United States. These funds account for roughly $50 billion in assets under management.
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