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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, American Century Emerging Markets Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"American Century's EM Fund underperformed in Q1 2025 amid trade policy uncertainty, returning 0.72% versus benchmark's 2.93%. Portfolio emphasizes domestic-oriented companies with strong fundamentals, highlighted by Chinese EV leader BYD and Brazilian aircraft maker Embraer."
American Century's Emerging Markets Fund posted a 0.72% return in Q1 2025, underperforming the MSCI Emerging Markets Index's 2.93% gain. The portfolio maintained focus on companies with strong fundamentals not reflected in valuations. Key contributors included Chinese EV maker BYD, which is upgrading technology platforms for global expansion, consumer electronics company Xiaomi benefiting from smartphone market share gains, and Brazilian aircraft manufacturer Embraer reporting strong order momentum. Detractors included an underweight to Alibaba despite AI-driven rally, Indian food delivery company Zomato facing competition pressures, and Chinese construction firm CSCI missing earnings estimates. The managers initiated positions in Indian telecom Bharti Airtel and Hungarian bank OTP while exiting cloud infrastructure provider Wiwynn and semiconductor tool maker Kinik. Looking ahead, they see tariff impacts as differentiated across regions, with EM Asia facing headwinds while Latin America could benefit. The strategy emphasizes domestic-oriented equities and policy-sensitive names as EM central banks tilt toward growth-supportive policies.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager demonstrates solid conviction through specific stock selections, clear rationale for position changes, and detailed analysis of regional trade policy impacts. Portfolio construction reflects deliberate positioning rather than broad market exposure.
Growth Outlook
The manager expresses cautious optimism about EM markets despite near-term headwinds. They acknowledge tariff challenges but believe changing economic conditions could benefit EM, with supportive central bank policies and potential USD weakness providing tailwinds.
Risk Appetite
Positioning remains selective and cautious, focusing on domestic-oriented equities while maintaining underweights to challenged areas like Chinese e-commerce. The approach emphasizes companies with strong fundamentals rather than aggressive risk-taking.
Capital Deployment
Capital deployment appears measured with selective new positions in Bharti Airtel and OTP Bank while exiting Wiwynn and Kinik. No indication of significant cash level changes or aggressive deployment, suggesting a balanced approach.
Forward Guidance
Forward guidance shows measured optimism with plans to benefit from policy stimulus sensitivity and domestic consumption themes. The manager sees opportunities emerging from differentiated regional impacts of trade policies.
Language Signal
Language is balanced with selective use of positive terms like 'opportunity' and 'tailwinds' offset by acknowledgment of 'headwinds' and 'uncertainty.' Overall tone is cautiously constructive rather than strongly bullish or bearish.
Perceived Risk
The manager acknowledges significant risks from trade policy uncertainty, tariff impacts on EM Asia, and competitive pressures in key markets like China. Risk discussion is prominent throughout the commentary, indicating elevated risk awareness.
Opportunity Density
Opportunities are viewed as selective rather than broad-based, with focus on specific themes like domestic consumption, policy-sensitive names, and regional beneficiaries of trade policy changes. Not a broad opportunity set but meaningful pockets identified.
Time Horizon
Investment approach appears patient with focus on companies where fundamentals are not yet reflected in prices. Discussion of structural themes like EV market evolution and policy shifts suggests medium to long-term investment horizon rather than short-term trading.
