uploads/uploads/2016/03/American-Century-Growth-Fund-%E2%80%93-Investor-Class-Vs-Peers1.jpg

The American Century Growth Fund Has Been Doing Well in 2016

By

Updated

American Century Growth Fund performance

In this article, we’ll specifically outline the performance of the American Century Growth Fund – Investor Class (TWCGX), which is one of the classes available for retail investors. The fund is invested in stocks of companies like Xilinx (XLNX), Simon Property Group (SPG), Pfizer (PFE), Maxim Integrated Products (MXIM), and Church & Dwight (CHD).

From a purely NAV (net asset value) return standpoint, the American Century Growth Fund – Investor Class has had a better one-year period until March 18, 2016, than ten of its peers in the group. When we refer to the peer group, we mean the group of 12 funds chosen for this review. For return comparison, we have chosen two ETFs: the Vanguard 500 ETF (VOO) and the iShares Russell 1000 Growth ETF (IWF).

For evaluating benchmark-related metrics, we’ve chosen the S&P 500 as the benchmark for all funds in this review, which VOO tracks.

Article continues below advertisement

Other metrics

TWCGX’s standard deviation, or the volatility of returns, in the one-year period until March 18 was 17.2%. This is higher than the S&P 500’s 16.7% but lower than the peer group’s average of 18.4%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended March 18. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio for 2015 had placed the TWCGX seventh among its peers.

The information ratio, calculated with the S&P 500 as the benchmark, was negative for the one-year period ended March 18. As with the Sharpe Ratio, we can’t evaluate a negative information ratio. The information ratio shows the consistency of a fund manager along with measuring his or her ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio had ranked seventh.

A note to investors

TWCGX’s alpha for 2015 had placed it eighth. However, in the one-year period ended March 18, 2016, the fund’s alpha placed it fifth among its peers. YTD 2016 has been good for the fund as its alpha placed it among the top three funds in this review. Given this mixed performance across periods, investors would do well to assess whether the fund’s investment strategy suits them. Current investors should be pleased, as the fund has been able to limit its downside, but they need to be watchful nonetheless.

In the next article, we’ll look at the Vanguard Capital Opportunity Fund – Investor Shares (VHCOX).

Advertisement

More From Market Realist