Investment Products and Service Launches

American Century Releases New Alternative Investments Fund

The AC Alternative Disciplined Long Short Fund by American Century Investments will be available to clients and investors seeking equities with potentially lower volatility, the firm announced.

“AC Alternatives Disciplined Long Short is a welcome addition because it’s another way to help clients strive to mitigate risk in their portfolios,” says Cleo Chang, senior vice president and head of alternative investments for American Century Investments. “We also believe long/short strategies can provide important diversification with the potential for more consistent returns over a full market cycle.”

This fund builds on the firm’s AC Alternatives lineup, which it kicked off in 2015.

The fund, formerly known as Disciplined Growth Plus and launched in 2011, has been redesigned to be a long/short equity product with a variable net exposure to equities that will typically range from 30% to 70%.

American Century says it will continue to follow the same investment philosophy with modifications around the amount of the fund that can be long or short based on a dynamic, market-exposure model. These decisions will incorporate short-term market forecast models that have been employed within the firm for decades, enhanced with longer-term market forecasting tools. Previously, Disciplined Growth Plus was a 130/30 fund with 100% net exposure to equities. “We revamped the fund to adapt to changing market dynamics and client preferences,” says Chang.

The fund is available in Investor (ACDJX), Institutional (ACDKX), A (ACDQX), C (ACDHX) and R (ACDWX) share classes.

AC Alternatives Disciplined Long Short is managed by Chief Investment Officer, Multi-Asset Strategies & Disciplined Equity, Scott Wittman, CFA, CAIA; and Vice President and Portfolio Manager Yulin Long, CFA.

First Trust Advisors, an asset manager and provider of exchange-traded funds (ETFs), has launched two new investment vehicles. The EquityCompass Risk Manager ETF and the EquityCompass Tactical Risk Manager ETF will be actively managed by EquityCompass Strategies. These funds will aim to provide long-term capital appreciation with capital preservation as a secondary objective. Portfolio managers employ an investment strategy seeking to avoid prolonged market losses and reduce volatility.

“We believe these ETFs will be useful tools for investment advisers seeking to manage risk in their clients’ portfolios, while maintaining exposure to United States equities. As sub-adviser, EquityCompass brings a unique approach to risk-management, supported by years of rigorous empirical research,” says Ryan Issakainen, CFA, senior vice president, ETF strategist at First Trust.

The frim notes that EquityCompass believes avoiding the market’s worst down days is meaningfully more beneficial than the penalty that comes from missing the best up days. It points out that gains required to fully recover from a loss need to be greater than the original loss. For example, a 20% loss requires a 25% gain for a full recovery, and a 10% loss requires an 11.1% gain to recover. Out-sized losses can add years to the time it takes to recover capital.

“Following two devastating bear markets in the last 17 years, investors, especially those nearing or in retirement, recognize the vulnerability of equity markets and are seeking risk management solutions. EquityCompass has been successfully utilizing active risk management in our portfolios since 2009. We are excited to collaborate with First Trust to offer investors a convenient and efficient method for incorporating this strategy into their portfolios,” says Richard E. Cripps, CFA, and chief investment officer at EquityCompass.

The funds’ portfolio managers include Timothy M. McCann, senior portfolio manager, EquityCompass; and Bernard J. Kavanagh, III, portfolio manager, EquityCompass.

NEXT: Thornburg Investment Management Adds R6 Share Classes

Thornburg Investment Management (TIM) announced it is adding R6 share classes to four of its funds. The change will apply to the Thornburg Global Opportunities Fund (THOGX), Investment Income Builder Fund (TIBOX), Limited Term Income Fund (THRLX), and Strategic Income Fund (TSRSX).

The new shares will be sold through defined contribution (DC) and defined benefit (DB) pension plans. The firm says these share classes will meet the growing demand for lower-cost options and greater fee transparency.

“We’re meeting the need for more flexible and transparent fee structures with the addition of R6 shares on four more Thornburg funds,” says Christina Stauffer, head of DCIO business development at Thornburg. 

TIM says R6 shares are offered at net asset value with no sales charges, 12(b)-1 fees, or any shareholder servicing fees. They are designed to make it easier for plan sponsors to comply with new Department of Labor (DOL) fee disclosure regulations by separating mutual fund expenses from recordkeeping and other service-provider fees. This will allow plan fiduciaries to determine if plan services fees are fair and reasonable. 

R6 shares are currently offered on the Thornburg International Value Fund (TGIRX), International Growth Fund (THGIX), and Developing World Fund (TDWRX).

For more information, visit www.thornburg.com.