American Century Investments this month will launch five exchange-traded funds in its Avantis Investors suite of actively managed products that is spearheaded by a couple of former executives from Dimensional Fund Advisors.
Based on the prospectus filed with the Securities and Exchange Commission, American Century will offer five investment strategies under the Avantis umbrella in both ETF and mutual fund formats in the categories of U.S. equities, international equities, emerging-market equities, U.S. small-cap value equities and international small-cap value equities.
All five sets of ETFs and mutual funds will emphasize companies that portfolio managers believe have strong profits and low valuations. High-profitability companies are considered those with higher cash-based operating profits, while value companies are those with lower prices relative to book value or other fundamental value.
And all five sets respectively will have matching expense ratios, which will range from 0.15% for the U.S. equity strategy to 0.36% for the international small-cap strategy. Those fees are on the low side for actively managed equity ETFs and mutual funds—particularly those focused on international and emerging markets.
An American Century spokesperson said the ETFs are expected to debut in the latter half of September, while the mutual funds should follow suit later in the autumn.
American Century in June announced it hired Eduardo Repetto as chief investment officer and Patrick Keating as chief operating officer at its new Avantis Investors unit. Repetto previously was co-CEO and chief investment officer at DFA, while Keating formerly was DFA’s chief operating officer. DFA is an asset manager known for its factor-based strategies and its strong following among financial advisors.
In August, American Century hired three senior portfolio managers—all of who previously worked with Repetto at DFA—to help manage the Avantis funds.
American Century is a global asset manager based in Kansas City, Mo. Avantis will operate from Los Angeles.
According to the Avantis website, their investment approach is based on the belief that price is a fundamental driver of higher expected returns, along with profitability, size, and momentum characteristics, in tandem with other market considerations.
While these technically are factor-based strategies, the Avantis team doesn’t embrace that term regarding its products. “We think of ourselves as a company that uses market prices and financial science to create value-added portfolios,” according to an emailed statement. “We don’t really like to call it factor investing because we’re not trying to deliver a factor.”