Average Annual Total Returns for Period Ended 6/30/2024
Class |
Qtr(%) |
1 Year(%) |
3 Year(%) |
5 Year(%) |
10 Year(%) |
Since Inception(%) |
Inception Date |
Gross Expense Ratio(%) |
Investor |
9.43 |
34.63 |
1.91 |
16.77 |
14.80 |
11.58 |
5/31/06 |
0.86 |
I |
9.50 |
34.89 |
2.12 |
17.00 |
15.03 |
11.80 |
5/31/06 |
0.66 |
R6 |
9.54 |
35.09 |
2.27 |
17.18 |
– |
19.77 |
12/1/16 |
0.51 |
Russell 1000 Growth Index |
8.33 |
33.48 |
11.28 |
19.34 |
16.33 |
– |
– |
– |
Data presented reflects past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. To obtain performance data current to the most recent month end, please visit www.americancentury.com/performance. Investment return and share value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains. Returns for periods less than one year are not annualized. For information about other share classes available, please consult the prospectus. There is no guarantee that the investment objectives will be met. Dividends and yields represent past performance and there is no guarantee that they will continue to be paid. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future. Expense ratio as of the most current prospectus. Periods greater than one year have been annualized. Returns or yields for the fund would have been lower if a portion of the management fee had not been waived. Review the annual or semiannual report for the most current information. |
Portfolio Review
Top 10 holdings
Alphabet Inc (GOOG,GOOGL) |
11.93 |
Amazon.com Inc (AMZN) |
10.55 |
Microsoft Corp (MSFT) |
5.30 |
Tesla Inc (TSLA) |
4.87 |
Chipotle Mexican Grill Inc (CMG) |
3.77 |
Intuitive Surgical Inc (ISRG) |
3.69 |
Regeneron Pharmaceuticals Inc (REGN) |
3.60 |
Netflix Inc (NFLX) |
3.56 |
Salesforce (CRM) |
3.54 |
As of 6/30/2024 The holdings listed should not be considered recommendations to purchase or sell a particular security. Equity holdings are grouped to include common shares, depository receipts, rights and warrants issued by the same company. Fund holdings subject to change. |
Stocks posted gains. U.S. large-cap stocks broadly moved higher. Performance continued to be largely driven by the stocks of companies currently benefiting from artificial intelligence and those expected to benefit as AI is incorporated into their businesses.
Large-cap growth stocks led performance. Stock gains were mostly due to the outperformance of large-cap stocks, especially select large-cap growth stocks that benefited from optimism about AI. Value stocks struggled across the market- capitalization spectrum, as did mid- and small-cap growth stocks.
Biotechnology benefited performance. Stock choices in the industry were positive and contributed to outperformance in the health care sector. Alnylam Pharmaceuticals (ALNY) was a top contributor.
Consumer discretionary was a top contributor. Sector outperformance was due to stock selection. Avoiding specialty retailers was advantageous as the industry suffered from a slowdown in consumer spending and a weak housing market.
Information technology detracted. Stock selection and an underweight in the sector relative to the benchmark hampered performance. Not owning Apple (AAPL) was a significant detractor. Software also weighed on performance.
Key Contributors
Nvidia (NVDA). The stock price of this leading maker of graphics processing units continued to soar on the strength of demand for its chips in artificial intelligence applications. In May, Nvidia reported quarterly revenue and earnings that beat already high analysts’ estimates and raised guidance.
Alnylam Pharmaceuticals. The biopharmaceutical company’s stock rose sharply after it reported strong positive results for its heart drug in late-stage trials. Alnylam is a leader in RNA interference, a new treatment modality that could address a broad range of diseases, and has several drugs on the market and in development.
Alphabet (GOOG,GOOGL) . Google parent Alphabet reported strong results with earnings, revenues and margins driven by strength across all major business segments. Management attributed results to Alphabet’s investment in its AI capabilities. Alphabet also announced a large share repurchase program.
Key Detractors
Apple (AAPL). Having no exposure to the consumer electronics giant’s stock hurt performance compared with the benchmark. With some artificial intelligence features available on the next iPhone, investors expect a more robust iPhone 16 cycle. We also believe Apple does not fit our focus on early stage growth companies.
salesforce.com (CRM). The stock of this subscription-based business software company fell sharply after it missed revenue expectations and offered weak guidance. However, we continue to believe that there are growth and margin expansion opportunities for the company.
Block (SQ). The financial services firm lagged despite posting better-than-expected quarterly results, driven by Square, its digital payments division. We think investors may have been concerned about Block’s heavy investment in cryptocurrencies, and there were reports that the company’s compliance policies were undergoing federal scrutiny.
Notable Trades
ARM Holdings (ARM). ARM is a U.K.-based company benefiting from the demand for artificial intelligence chips. ARM licenses its technology to chipmakers and others to facilitate effective, energy-efficient design. Our research indicated the company has a deep competitive moat due to its technological prowess, economies of scale and high switching costs for customers, among other factors.
No positions were liquidated during the period.
Portfolio Positioning
Our process uses bottom-up financial analysis aimed at identifying large-cap companies that we think have the potential to produce attractive long-term earnings growth. We seek to reduce unintended, nonfinancial risks and align the portfolio with company-specific risks that we believe will be rewarded over time. As a result of this approach, our sector and industry allocations reflect areas of the market where we believe we are finding opportunities at a given time.
Corporate earnings often drive returns. Corporate earnings are key in our opinion because we see stock returns as a function of earnings growth often indicating the price investors are willing to pay for those earnings. We’ve seen some companies recently issuing earnings guidance that have pushed up full-year 2024 estimates. We believe this reflects a stable economy with firms able to navigate the current environment despite significantly higher interest rates. However, because the market is typically forward-looking, trading on expectations of future growth, we expect investors to focus more on 2025 earnings estimates, which we think could be a bit high as future earnings often depend on the broader economy and Federal Reserve (Fed) interest rate policy. We believe the more restrictive the Fed stays, the more difficult the environment could be for future earnings growth.
We think several secular trends remain in place. We believe market uncertainty will likely remain high as investors shift their focus from the Fed’s interest rate policy to other aspects of the economy such as the pace of growth and corporate earnings. While consensus earnings forecasts for 2024 and 2025 predict solid growth, we believe, even using these lofty projections, that valuations on large-cap stocks look expensive. Having said that, we acknowledge that the earnings of a handful of large growth companies have been excellent, in our view. In this environment, we continue to seek companies that we think can benefit from enduring, secular business trends while growing earnings. Examples of the types of companies that we have found attractive include those involved in digital advertising and business transformation, the reliance on the cloud and mobile, process automation and electric vehicle adoption, among others.
We believe productivity is central to profit growth. We have seen lasting challenges to productivity growth in the movement toward nationalism, deglobalization and demographic trends of social inequality and aging global populations. Worker productivity is critical to corporate profit growth, in our view, and we hope that artificial intelligence and other technologies can help offset these productivity declines over time. Moreover, uncertainty remains high on several fronts, which we think explains the extreme market concentration that we’ve been witnessing. In addition to the economy, interest rates and inflation, wars and elections introduce other sources of potential volatility. We believe progress on any or all of these fronts could lead to broader market participation.
Volatility often presents opportunities. In general, business conditions vary from quarter to quarter and year to year, and stocks go up or down in the near term for any number of reasons. However, we believe companies with solid long-term growth prospects are better situated to ride out uncertainty relating to economic and earnings growth. As a result, we believe our portfolio investments have significant long-term growth opportunities. As ever, we continue to monitor the financial progress and risks of our investments. We seek to utilize short-term volatility as an opportunity to add to positions when we see share prices disconnect from our assessment of long-term true potential.
We remain focused on individual security selection. While we believe there’s a tendency to think about potential Fed rate changes and economic uncertainty in binary terms, we would argue that individual companies respond differently to macroeconomic conditions. As a result, we’ve found what we believed were opportunities in diverse companies developing new products and technologies that are transforming entire sectors and industries. We don’t view these as top-down solutions. Rather, we rely on our bottom-up, financial research to identify individual companies that we think are innovating and reimagining their competitive landscape. This is why we remain focused on investing in what we consider dynamic, innovative growth companies with healthy balance sheets and cash flows that can improve throughout the economic cycle.
You should consider the fund’s investment objectives, risks, and charges and expenses carefully before you invest. The fund’s prospectus or summary prospectus, which can be obtained at American Century Investmentsยฎ Home, contains this and other information about the fund, and should be read carefully before investing. The opinions expressed are those of the portfolio investment team and are no guarantee of the future performance of any American Century Investments portfolio. Statements regarding specific holdings represent personal views and compensation has not been received in connection with such views. This information is for an educational purpose only and is not intended to serve as investment advice. The information is not intended as a personalized recommendation or fiduciary advice and should not be relied upon for investment, accounting, legal or tax advice. The Russell 1000ยฎ Index measures the performance of the 1,000 largest companies in the Russell 3000ยฎ Index(the 3,000 largest publicly traded U.S. companies based on total market capitalization). The Russell 1000ยฎ Growth Index measures the performance of those Russell 1000ยฎ companies with higher price-to-book ratios and higher forecasted growth values. Created by Frank Russell Company, indices are not investment products available for purchase. Many of American Century’s investment strategies incorporate the consideration of environmental, social, and/or governance(ESG) factors into their investment processes in addition to traditional financial analysis. However, when doing so, the portfolio managers may not consider ESG factors with respect to every investment decision and, even when such factors are considered, they may conclude that other attributes of an investment outweigh ESG considerations when making decisions for the portfolio. The consideration of ESG factors may limit the investment opportunities available to a portfolio, and the portfolio may perform differently than those that do not incorporate ESG considerations. ESG data used by the portfolio managers often lacks standardization, consistency, and transparency, and for certain companies such data may not be available, complete, or accurate. IN-FLY-96438 American Century Investments Services, Inc., Distributorยฉ2024 American Century Proprietary Holdings, Inc. All rights reserved. Non-FDIC Insured May Lose Value No Bank Guarantee |
Original Post
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