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By DailyAlts Staff American Century has been fairly quiet on the liquid alternatives front as the product category has experienced a boom since the 2008 financial crisis. In 2011, the firm launched two “130/30” funds and a market-neutral fund, and it has been operating another equity market-neutral fund since 2005, but American Century has largely been on the sideline of the liquid alts movement. That is, until now. On February 3, American Century filed paperwork with the Securities and Exchange Commission (SEC) seeking approval for three new alternative mutual funds. The firm has also initiated a new brand for its alternatives business and filed to trademark the brand “AC Alternatives,” which is used on the new line of alternative mutual funds. The AC Alternatives Income Fund The AC Alternatives Income Fund’s stated objective is providing investors with “diverse sources of income.” In pursuit of this objective, the fund’s managers will combine several distinct strategies designed to capture current yield, while also seeking to protect inflation-adjusted purchasing power through capital appreciation. Some of the fund’s strategies and investments will include: Corporate credit strategies Structured credit strategies Real estate strategies MLP strategies Income-oriented equity strategies The fund will also pursue PWP overlay strategies, which involve “exploiting market opportunities, managing inflows and outflows of fund assets and/or hedging against certain risks” identified by sub-advisor PWP. Arrowpoint Partners and Good Hill Partners are also listed as sub-advisors to the fund, but according to the prospectus, PWP “may make recommendations to the advisor to terminate and replace underlying sub-advisors from time to time.” The AC Alternatives Equity Fund The AC Alternatives Equity Fund will employ several equity strategies, with low correlation to one another and the broad market, in pursuit of capital appreciation. As with the AC Alternatives Income Fund, PWP is a sub-advisor and PWP overlay strategies are among the equity strategies that will be utilized by the AC Alternatives Equity Fund. Other strategies include: Long-only Long/short Event driven Trading oriented strategies In addition to the overlay strategies, PWP will also sub-advise the fund’s event driven and trading strategies, while Passport Capital will sub-advise its long/short equity strategies. The AC Alternatives Multi-Strategy Fund Finally, the AC Alternatives Multi-Strategy Fund will pursue four distinct strategies managed by four different sub-advisors, as well as four additional strategies sub-advised by PWP. The strategies, which span asset classes, are listed below with their sub-advisors in parenthesis: Long/short credit (Good Hill Partners) Long/short credit (MAST Capital) Event driven (Levin Capital) Long/short equity (Passport Capital) Overlay (PWP) Global macro (PWP) Real assets (PWP) Trading strategies (PWP) American Century’s Existing Alts The three new alternative mutual funds will join American Century’s current lineup of liquid alts, which include a pair of “130/30” funds (arguably not an alternative strategy since it has a beta of 1.0 to its benchmark) and a pair of market-neutral equity funds. The “130/30” funds, which average 130% long and 30% short equity exposure, have outperformed their long-only counterparts. The American Century Core Equity Plus Fund (MUTF: ACPVX ), with approximately $170 million in fund assets, has a five-star rating from Morningstar and generated a 14.99% return for the year ending January 30. The American Century Disciplined Growth Plus Fund (MUTF: ACDJX ), with approximately $33 million in fund assets, also has a five-star rating, and it generated an even better 20.21% return for the year ending January 30. The American Century Market Neutral Value Fund (MUTF: ACVVX ) launched at the same time as the two “130/30” funds and currently has approximately $76 million of fund assets. It has a four-star rating from Morningstar and generated a 3.31% return for the year ending January 30, which was still enough to rank it in the top 19% of its category. American Century’s oldest liquid alts product, the American Century Equity Market Neutral Fund (MUTF: ALHIX ), also has a four-star rating. It returned 2.07% for the year ending January 30 and currently has approximately $117 million of fund assets. For more information, visit americancentury.com . Scalper1 News
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