Performance evaluation of the American Century Growth Fund
The American Century Growth Fund – Investor Class (TWCGX) has had a poor run in the past six months through August 26, 2016. However, its strong performance earlier in the year has ensured that it remains an above-average performer in YTD 2016.
We have graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF). Let’s look at what has contributed to this above-average performance by the fund so far this year.
Contribution to returns
Information technology stocks have engineered TWCGX’s positive showing so far in 2016. The sector was led by Facebook (FB), with Symantec (SYMC) and Microsoft (MSFT) earning honorable mentions. There have been a few negative contributors such as Alliance Data Systems (ADS) and LinkedIn (LNKD), but they have not reduced the overall positive contribution by much.
Both consumer-focused sectors—discretionary and staples—have been sizable positive contributors to TWCGX as well. The consumer discretionary sector was led by Comcast (CMCSA), with Dollar Tree (DLTR), O’Reilly Automotive (ORLY), and Amazon (AMZN) having contributed substantially as well. Meanwhile, The Walt Disney Company (DIS), Expedia (EXPE), and TripAdvisor (TRIP) have dragged the sector down.
Consumer staples and industrials are a close third and fourth to the tech and discretionary sectors. The staples sector was helped up by Pepsico (PEP), Philip Morris (PM), and Church & Dwight (CHD), among others. However, Kroger (KR) has emerged as a substantial drag on the sector. Meanwhile, Lockheed Martin (LMT) and 3M (MMM) have helped the industrials sector.
Stocks from the healthcare sector have undone some of the good realized by the aforementioned sectors. Perrigo Company (PRGO), which has been liquidated, continues to show its negative impact on the sector. Other negative contributors include Gilead Sciences (GILD), Express Scripts Holding (ESRX), and Incyte (INCY).
The American Century Growth Fund – Investor Class (TWCGX) has done fairly well in YTD 2016. However, a look at our analysis shows that the numerous negative contributors across its sectors have held the fund back. This may indicate that fund managers are not finding it easy to pick stocks in 2016. Investors would do well to look at the fund’s long-term performance before deciding whether to invest in it.
In the next article, we’ll look at the Vanguard Capital Opportunity Fund – Investor Shares (VHCOX).