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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Positioned defensively in high-quality small caps, expanding overweights in cash-generative industrials and disciplined energy operators while initiating longs in Morningstar and avoiding speculative momentum in utilities."
During the third quarter of 2026, the American Century Small Cap Value Fund's Investor Class returned -6.42% net of fees (-6.27% net of fees for the I Class), lagging its benchmark, the Russell 2000 Value Index, which returned -4.91%. Over the one-year trailing period, the Investor Class posted a gain of 11.12% net of fees. Performance detracted primarily from stock selection in the materials sector, where execution issues impacted construction materials holdings, and an underweight posture in healthcare as biotechnology and medical equipment constituents advanced strongly. The macroeconomic landscape was characterized by escalating geopolitical tension surrounding the conflict in Iran, resilient oil prices, and persistent inflation pressures that prompted a Federal Reserve benchmark interest rate increase in September. These tighter monetary dynamics pressured small-cap equities relative to large caps, though value factors outperformed growth across capitalizations. In response, the fund maintained disciplined overweights in industrials and energy, reduced banking exposure to underweight while increasing capital markets, and preserved a zero allocation to utilities. Portfolio turnover reflected opportunistic capital reallocation, including initiating new long positions in Morningstar for its subscription analytics and ADI Global Distribution for installer network scale. The fund completed full exits in MarineMax and Accelerant Holdings after announced buyout acquisitions largely realized upside potential. Significant relative contributors included Accelerant Holdings, NIQ Global Intelligence, and Crescent Energy, while detractors were led by Cardinal Infrastructure Group, Entravision Communications, and Bath & Body Works.
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