American Century Small Cap Growth Fund Q2 2024 Commentary

seekingalpha09-20

Stock gains were almost entirely due to the outperformance of large-cap stocks, especially select large-cap growth stocks that were positioned to benefit from enthusiasm about AI.Our performance in ...

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href=https://seekingalpha.com/article/4722267-american-century-small-cap-growth-fund-q2-2024-commentary><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Stock gains were almost entirely due to the outperformance of large-cap stocks, especially select large-cap growth stocks that were positioned to benefit from enthusiasm about AI.Our performance in ...</p>\n\n<a href=\"https://seekingalpha.com/article/4722267-american-century-small-cap-growth-fund-q2-2024-commentary\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B66KJ199.SGD","symbol_name":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY  \" A\" (SGD) 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(%) Inception Date Gross Expense Ratio (%)   Investor -0.80 9.62 -3.08 9.51 10.38 9.46 6/1/01 1.17   I -0.76 9.79 -2.90 9.72 10.60 8.96 5/18/07 0.97   R5 -0.76 9.84 -2.90 9.73 10.61 12.42 4/10/17 0.97   Russell 2000 Growth Index -2.92 9.14 -4.86 6.17 7.39 - - -","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B66KJ199.SGD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY  \" A\" (SGD) ACC","BK4585":"ETF&股票定投概念","QTWO":"Q2 Holdings Inc","BK4139":"生物科技","NXT":"NEXTracker Inc","NTRA":"Natera, Inc.","GXO":"GXO Logistics Inc","SMCI":"超微电脑","IE00B19Z4B17.USD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY \"A\" (USD) ACC","GWRE":"Guidewire Software","LU1815336091.USD":"THREADNEEDLE (LUX) GLOBAL SMALLER COMPANIES \"AUP\" (USD) INC","BK4220":"综合零售","AFG":"美国金融集团有限公司","KOS":"Kosmos Energy","LU2065171402.SGD":"M&G (LUX) GLOBAL MAXIMA \"A\" (SGD) INC","XPRO":"Expro Group Holdings N.V.","OLLI":"Ollie's Bargain Outlet 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detracted from performance, led by consumer staples distribution and retail.syahrir maulana 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 -0.80 9.62 -3.08 9.51 10.38 9.46 6/1/01 1.17   I -0.76 9.79 -2.90 9.72 10.60 8.96 5/18/07 0.97   R5 -0.76 9.84 -2.90 9.73 10.61 12.42 4/10/17 0.97   Russell 2000 Growth Index -2.92 9.14 -4.86 6.17 7.39 - - -  \nClick to enlarge  Historical performance for the R5 Class prior to its inception is based on the performance of I Class shares, which have the same expenses as the R5 Class. Expense ratio is as of the fund's current prospectus. The I Class minimum investment amount is $5 million ($3 million for endowments and foundations) per fund. The R5 and R6 Share Classes are available only to participants in group employer-sponsored retirement plans where a financial intermediary provides recordkeeping services to plan participants. Periods greater than one year have been annualized. \nClick to enlarge Portfolio Review Stocks posted gains. U.S. stocks ended higher. As has been the case all year, performance was driven by companies that have benefited from artificial intelligence and those expected to benefit as AI is incorporated into their businesses. Growth stocks led performance. Stock gains were almost entirely due to the outperformance of large-cap stocks, especially select large-cap growth stocks that were positioned to benefit from enthusiasm about AI. Although growth stocks outperformed across capitalization ranges, mid- and small-cap stocks ended the month lower. Information technology was a solid contributor. Our performance in the sector was helped by not owning Super Micro Computer (SMCI). An overweight allocation to semiconductors and semiconductor equipment stocks relative to the benchmark was also helpful. Biotechnology benefited performance. Stock choices in the biotechnology industry led health care sector outperformance. Pharmaceuticals also contributed positively. Consumer staples stocks weighed on performance. Stock choices in the sector detracted from performance, led by consumer staples distribution and retail. Not owning Sprouts Farmers Market was a significant detractor. Key Contributors Super Micro Computer. This distributor and manufacturer of high-performance supercomputer technologies benefited from demand for artificial intelligence servers earlier in the year, but the stock sold off after its quarterly report disappointed amid high investor expectations. Our lack of exposure to the stock benefited performance. Expro Group Holdings (XPRO). After weak execution in mid-2023, the oil field services company returned to what we believed was solid execution, reflected in earnings and guidance above analyst expectations. ADMA Biologics (ADMA). This biopharmaceutical company focused on plasma protein therapeutics exceeded investor expectations for revenue and profit and raised guidance. Key Detractors SiteOne Landscape Supply (SITE). We believe unfavorable weather, slowing new home construction and falling prices in some of the raw materials it distributes caused a reduction in earnings guidance for this distributor of landscaping products. The AZEK Co. (AZEK). This manufacturer of composite decking systems lagged despite reporting revenue and earnings that were better than investors had forecast. Our research indicated that delayed interest rate-cut expectations due to inflation also weighed on sentiment for many housing-related stocks. DoubleVerify Holdings (DV). The company provides advertising customers with verification and measurement of advertising placements on key consumer platforms such as social media and entertainment. We eliminated our holding as guidance was weak for the second straight quarter although quarterly results were better than expected. Notable Trades FTAI Aviation (FTAI). We established a position in this aerospace financing, service and parts company, which has been transitioning from an aircraft leasing pure play into a diversified aerospace company with a larger mix of profits coming from its replacement parts business. We think the market underestimates the value of this transition. Q2 Holdings (QTWO). We initiated a holding in this provider of virtual banking software. Our research indicated that a war for deposits has been driving demand for new technology. Banks want to upgrade and consolidate their online systems, and we think Q2 is positioned to benefit from being a single platform with an easy user interface driven by the need for deposits and fraud protection. NEXTracker (NXT). We sold our position in this maker of integrated solar trackers and software for solar energy projects. Although it exceeded our revenue and earnings expectations, consensus estimates surpassed our own estimates, while we believed industry-level delays in large projects presented a new risk to performance. Savers Value Village (SVV). We eliminated this thrift retailer. Execution by management has been spotty, in our view. Recent results have been choppier than we'd like for a company that has been aiming to establish a high-quality reputation as a durable-growth retailer. Portfolio Positioning Our process is designed to identify companies producing attractive, sustainable earnings growth. We seek to reduce unintended risks and align the portfolio with company-specific characteristics that we believe will be rewarded over time. As a result of this approach, our sector and industry allocations reflect where we are finding opportunities at a given time. Macroeconomic indicators have weakened, and we remain cautious. The most recent economic data were generally weaker overall from retail sales to housing starts and home sales to industrial production. We believe this has supported the idea that the modest move to expansion in early 2024 was a blip. With housing starts weak, builder confidence slowing, retail sales coming in weaker (notably with the low-end consumer) and small business confidence remaining weak, we have become more worried about when bad news becomes bad for markets as we think it could indicate that the Federal Reserve may need to act to stop a material slowdown in economic activity. We are straddling the line between cyclical and defensive positioning. After adding modestly to cyclicality in the first quarter, we slowed our move away from defensive positioning as economic data turned weaker in the second quarter. We prefer to wait until we see more evidence that the economy is back on course. Our portfolio weightings reflect our caution. We maintained our relative positioning relative to the benchmark with overweights in financials, health care, materials and real estate and underweights in information technology and communication services. Our process is ongoing. Although we have slowed our move to greater cyclicality in the portfolio, we continue to evaluate our positioning regularly, while applying our bottom-up process to find what we believe are the best opportunities. Top 10 Holdings (%)   Expro Group Holdings NV 2.32   AZEK Co Inc/The 1.66   FTAI Aviation Ltd 1.61   Kosmos Energy Ltd (KOS)  1.57   Carpenter Technology Corp (CRS) 1.54   Natera Inc (NTRA) 1.47   GXO Logistics Inc (GXO) 1.28    Applied Industrial Technologies Inc (AIT) 1.26   Ollie's Bargain Outlet Holdings Inc (OLLI) 1.25   Guidewire Software Inc (GWRE) 1.24  \nClick to enlarge  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. \nClick to enlarge  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. 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 Investments® 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. Historically, small- and/or mid-cap stocks have been more volatile than the stocks of larger, more established companies. Smaller companies may have limited resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than those of larger companies. The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000® Growth Index measures the performance of those Russell 2000® 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. \nClick to enlarge Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.1","shortVersion":"4.28.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2468611180"}