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Average Annual Total Returns for Period Ended 6/30/2024
|
Since |
Inception |
Gross Expense |
||||||
|
Class |
Qtr(%) |
1 Year(%) |
3 Year(%) |
5 Year(%) |
10 Year(%) |
Inception(%) |
Date |
Ratio(%) |
|
Investor (MUTF:TWMIX) |
4.82 |
14.20 |
-8.96 |
1.21 |
2.73 |
5.42 |
9/30/97 |
1.27 |
|
I |
4.88 |
14.45 |
-8.76 |
1.39 |
2.92 |
7.55 |
1/28/99 |
1.07 |
|
R5 |
4.88 |
14.44 |
-8.78 |
1.39 |
2.93 |
3.39 |
4/10/17 |
1.07 |
|
R6 |
4.88 |
14.51 |
-8.64 |
1.53 |
3.08 |
3.88 |
7/26/13 |
0.92 |
|
MSCI Emerging Markets Index |
5.00 |
12.55 |
-5.07 |
3.10 |
2.79 |
– |
– |
– |
|
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. 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. Pre-inception differences in R5 Class and I Class performance are based on rounding. 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 Share Class is 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. |
Portfolio Review
Emerging markets (‘EM’) stocks advanced and outperformed developed markets equities. EM stocks received a boost from artificial intelligence (‘AI’)-related stocks, especially in June. Taiwan and China led markets higher, fueled by AI and expectations for accelerating demand for chips from data centers and edge or on-device AI. The Chinese market rebounded amid supportive policy measures and stronger economic data.
India, South Africa rallied. The incumbent Indian prime minister’s victory lifted investor sentiment around policy continuity. South African stocks rallied on news of a post-election unified government. Conversely, markets in Brazil and Mexico declined. Brazil struggled with hotter-than-expected inflation, while political uncertainty weighed on Mexican stocks amid concerns around the ruling party’s concentrated power.
Positioning in health care dampened returns. An overweight to the sector relative to the benchmark and stock selection detracted, led by weakness for drug manufacturers Sun Pharmaceutical Industries and Samsung Biologics. We believe that Samsung Biologics, in particular, can capitalize on growing demand for biologics contract development and manufacturing, given its world-leading capacity.
The industrials sector hurt relative results. Stock selection weighed on returns. The largest individual sector detractors included aircraft manufacturer Embraer (ERJ), battery maker Contemporary Amperex Technology Co. and solar inverter and energy storage system supplier Sungrow Power Supply. Embraer shares pulled back as potential catalysts, such as stronger orders for commercial and defense aircraft, have yet to materialize.
Chip stocks drove relative gains. Stock selection and a favorable overweight in the semiconductors and semiconductor equipment industry relative to the benchmark added substantial value during the quarter. South Korea-based SK hynix (OTCPK:HXSCF) and fellow chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) were among the leading individual contributors as the industry has benefited from improving demand and a stronger outlook for AI chips and high bandwidth memory.
Key Contributors
BIM Birlesik Magazalar (OTCPK:BMBRF). We believe the Turkish retailer’s positive traffic momentum supported shares, while solid results confirmed strong execution, with industry-leading growth, market share gains and margin improvement. Our research indicated BIM is well positioned for a slower consumer environment as the government aims to bring down inflation.
SK hynix. According to our research, strong high bandwidth memory demand and a recovery in memory prices following production cuts has fueled an improved memory price outlook and higher price assumptions. We think SK Hynix’s dominance of the high bandwidth memory market has supported shares amid raised earnings forecasts to reflect higher-than-expected chip prices.
Taiwan Semiconductor Manufacturing Co. Investors rewarded TSMC’s robust earnings visibility from expanding generative artificial intelligence demand and leadership in leading-edge chips with rebounding margins. In our view, high utilization from advanced nodes and potential price hikes have the potential to drive further growth.
Top 10 Holdings(%)
|
Taiwan Semiconductor Manufacturing Co Ltd (TSM) |
11.06 |
|
|
Tencent Holdings Ltd (OTCPK:TCEHY) |
5.50 |
|
|
Samsung Electronics Co Ltd (OTCPK:SSNLF) |
5.44 |
|
|
SK Hynix Inc (OTCPK:HXSCF) |
3.37 |
|
|
Reliance Industries Ltd |
2.82 |
|
|
ICICI Bank Ltd (IBN) |
2.75 |
|
|
China Construction Bank Corp (OTCPK:CICHY) |
2.35 |
|
|
BIM Birlesik Magazalar AS (OTCPK:BMBRF) |
1.94 |
|
|
Trip.com Group Ltd (TCOM) |
1.89 |
|
|
BYD Co Ltd (OTCPK:BYDDF) |
1.70 |
|
|
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. |
Key Detractors
Cemex (CX). We believe the stock’s weakness was driven by the drop in the Mexican equity market and some cooling in Mexican construction activity. We also think onshoring continues to support the Mexican and U.S. economies and that additional infrastructure projects for needed housing and roads will likely drive further cement demand growth.
Bank Rakyat Indonesia Persero (OTCPK:BKRKY). Shares of this Indonesian bank continued to decline from a recent all-time high amid investor concerns about asset quality, particularly given headwinds in the microlending segment. Our research also indicated persistent above- average lending costs weighed on the stock.
Sands China (OTCPK:SCHYY). The casino operator’s first-quarter results missed analyst expectations due to unfavorable win rates on high-minimum wagers and disruptions from ongoing construction. Consensus earnings estimates were also adjusted lower during the period.
Notable Trades
InterGlobe Aviation (JOBY). Our research indicated low-cost Indian carrier IndiGo has a commanding share of the underpenetrated domestic market amid a post-COVID-19 revival in passenger volumes, which are expected to double by 2030. We believe IndiGo stands to benefit from strong fare trends, new airport developments and ongoing international expansion.
Contemporary Amperex Technology Co. According to our research, despite market oversupply,CATL has maintainedprofitability through its technology and cost advantages.We believe CATL leads its global peers in technology offerings, cost competitiveness and financial stability in the new energy vehicle and energy storage system battery markets.
Vale (VALE). Our research showed that the Brazil-based global mining giant’s margins have come under pressure, reflecting lower iron ore prices and slightly higher costs.
Localiza Rent a Car (OTCQX:LZRFY). We exited the Brazil-based car rental company, given what we believed was uncertainty due to the lack of visibility on vehicle prices(and thus depreciation). In our view, falling car prices could prevent meaningful earnings expansion in the foreseeable future.
Portfolio Positioning
The portfolio continues to invest in companies where we believe financials are strong and improving but share price performance does not fully reflect these factors.
Our outlook remains constructive. With inflation pressure lessening and monetary policy easing in its early stages, we believe emerging markets economies could grow more than twice the rate of developed markets. Though the Federal Reserve’s (Fed’s) higher-for- longer stance has deterred aggressive moves by EM central banks, we think a gradual broadening of easing in the second half of the year could be likely as inflation continues to moderate.
China’s economy got off to a good start, but the property market remains a headwind. China’s economy grew faster than expected in the first quarter. However, data have shown some recent signs of softness, suggesting that the domestic demand recovery hasn’t fully found firm footing. Our research has indicated that the housing market continues to face downward price pressures from excess supply. Though the direction of property market policy is encouraging, we think housing activity will likely remain weak through the end of the year.
Electronics trends spur earnings growth in Asia. Strong exports from South Korea and Taiwan have been driving continued expansion in electronics manufacturing activity. We expect the build-out of artificial intelligence infrastructure to remain a growth catalyst and have seen signs of a recovery in regular servers.
Latin American central banks have become more cautious. Political noise, inflation falling at a slower pace and the Fed’s more hawkish stance are influencing the banks’ measured approach. According to our research, broader growth has held up, and trends such as trade protectionism and sticky raw materials’ prices have been positive. Despite post-election volatility in Mexico, supportive economic factors, such as near shoring and remittances, remain in place, in our view. In Brazil, we believe economic activity has also remained resilient with private consumption supported by the tightness in the labor market.
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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. International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations. Investing in emerging markets may accentuate these risks. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. IN-FLY-92057 American Century Investments Services, Inc., Distributor©2024 American Century Proprietary Holdings, Inc. All rights reserved. Non-FDIC Insured May Lose Value No Bank Guarantee |
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
