American Century Investments, founded in 1958, is an asset management firm based in Kansas City, Missouri. American Century had assets under management (AUM) of $149.3 billion as of Nov. 31, 2015. The firm’s mutual fund family accounts for $120 billion of its AUM, and the firm considers itself a pure asset manager. The fund family has offerings covering U.S. growth equity, U.S. value equity, quantitative equity, global and non-U.S. equity, fixed income and asset allocation.

Nomura Holdings, Inc. (NYSE: NMR) is acquiring a 41% non-controlling interest in American Century that was previously owned by Canadian Imperial Bank of Commerce (CIBC) (NYSE: CM). CIBC decided to sell, as it was not going to be able to acquire a controlling interest. Nomura saw an opportunity to expand its offerings in the U.S. market, while bringing American Century’s expertise to its Asian clients.

Ownership

American Century’s ownership structure is an example of socially responsible investing, with a unique twist. Company founder James E. Stowers, Jr. and his wife Virginia were both cancer survivors. In 1994, they founded The Stowers Institute for Medical Research to which they donated 40% ownership and controlling voting interest in American Century. The institute focuses on genetics as a way to search for the causes of cancer and other diseases. Since 2000, this institute has received more than $1.2 billion in dividends from American Century.

Management

Jonathan S. Thomas has been president and chief executive officer since 2007. Prior to joining American Century in 2005, Thomas was the global chief operating officer of Morgan Stanley (NYSE: MS). His career has included management positions at Fidelity Investments, Boston Financial Services and Bank of America Corporation (NYSE: BAC).

The firm has two co-chief investment officers, Victor Zhang and G. David MacEwen. Zhang came to American Century in 2014 from Wilshire Funds Management, where he served as president and chief investment officer. MacEwen has been with American Century Investments since 1991 and is in charge of global fixed-income operations.

People

American Century has a community involvement program that matches employee contributions to charities up to $5,000. The firm’s website has an equal employment opportunity policy statement and a diversity statement. However, on the surface, the firm does not appear to fully uphold these standards.

All of the top managers with corporate bios are male. A sampling of 20 of the firm’s mutual funds showed only three female members on the portfolio management teams, with none of the women working out of the firm’s Kansas City headquarters. As diversity is becoming an increasingly important benchmark of how the public views companies, American Century needs to do a much better job of showing a true belief in diversity within its management teams.

Performance

Morningstar ratings for American Century funds show the taxable bond, municipal bond and international stock funds rank slightly above average when compared to their peers. The domestic stock funds rank well above their peers with a score of 4.

The American Century Equity Income Fund ("TWEIX") is one of American Century’s top-rated funds with an overall Morningstar rating of five stars, and a history of consistent returns and longevity of management. One of the fund’s managers, Phillip N. Davidson, has been with the fund since its inception in July 1994. Portfolio information is based on data as of Jan. 31, 2016, and fund returns are based on the time period ending Feb. 29, 2016.

The American Century Equity Income Fund primarily seeks income with a secondary goal of appreciation. It invests in high-dividend-paying common stocks, though convertible securities account for 19% of net assets. Convertibles of Wells Fargo & Company (NYSE: WFC) and Bank of America Corporation comprise 8% of net assets.

This no-load fund has AUM of $8.8 billion, an expense ratio of 0.93%, a turnover rate of 56%, a beta of 0.65 and a standard deviation of 7.73. It tends to outperform its benchmark, the Russell 3000 Value Index. TWEIX has a year to date (YTD) of 4.4% and an annualized total return of 8.75% over three years, 8.65% over five years, 6.51% over 10 years and 10.31% since inception. When the general markets fell by more than 35% in 2008, the American Century Equity Income Fund only declined by 20%.

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