American Century Investments has launched a new Exchange Traded Fund (ETF) called American Century Multisector Floating Income ETF (FUSI). The ETF is listed on the New York Stock Exchange and primarily focuses on high credit quality.
The FUSI ETF seeks income and long-term capital appreciation by investing across several investment grades floating rate security types, such as collateralized loan obligations (CLOs), commercial mortgages, residential mortgages, corporate credit, and other similarly structured investments. The fund may also invest up to 35% of its portfolio in below-investment-grade securities, including bank loans and other related floating-rate debt.
The target duration of the FUSI fund will be less than one year, with a gross expense ratio of 0.27%. This competitive expense ratio should appeal to investors seeking a cost-effective way to access a diversified, primarily high-quality credit portfolio.
FUSI expands American Century’s Fixed Income ETF suite by offering a floating-rate income product built on a diversified, primarily high-quality credit portfolio. This means that investors can gain exposure to a range of fixed-income securities that offer the potential for higher yields compared to traditional frozen income products.
The launch of the FUSI ETF comes at a time when investors are increasingly seeking alternative sources of income to supplement their portfolios. Traditional fixed-income products offer relatively low yields, with interest rates at historic lows. The FUSI ETF provides an alternative option for investors seeking income while managing interest rate risk.
It is worth noting that the FUSI ETF invests in floating-rate securities, which can protect against rising interest rates. This is because the interest payments on floating rate securities adjust to changes in interest rates, which can help to offset any losses from changes in bond prices.
In conclusion, launching the American Century Multisector Floating Income ETF (FUSI) provides investors with a cost-effective way to access a diversified, primarily high-quality credit portfolio that seeks income and long-term capital appreciation. With interest rates at historic lows, the FUSI ETF offers an alternative option for investors seeking to generate income while managing interest rate risk.
Furthermore, the FUSI ETF is an excellent tool for investors seeking to diversify their portfolios. By investing in a range of investment-grade floating rate securities, the FUSI fund can help to spread risk across multiple asset classes, sectors, and issuers. This can reduce the impact of any single credit event on the portfolio and help to smooth out returns over time.
Investors interested in the FUSI ETF should also note that the fund invests in investment- and below-investment-grade securities. While this can provide the potential for higher yields, it also carries a higher level of risk. Therefore, investors should consider their risk tolerance before investing in the FUSI ETF.
The FUSI ETF also aligns with American Century’s commitment to responsible investing. The fund focuses on high credit quality and invests in securities that adhere to environmental, social, and governance (ESG) principles. This means investors can invest in the FUSI ETF while contributing to a more sustainable and responsible future.
The American Century Multisector Floating Income ETF (FUSI) is a welcome addition to American Century’s Fixed Income ETF suite. It offers investors a cost-effective way to access a diversified, primarily high-quality credit portfolio that seeks income and long-term capital appreciation. By investing in a range of investment grade floating rate securities, the FUSI ETF can help to spread risk across multiple asset classes, sectors, and issuers and provide an alternative option for investors seeking to generate income while managing interest rate risk.
