The value-style investment team at American Century, led by veteran Phil Davidson, is one of five nominees for Morningstar’s 2016 domestic stock fund manager of the year.
Davidson, a value manager at Kansas City-based American Century since 1993, heads the group of five, working with Kevin Toney, Michael Liss, Dan Gruemmer, and Brian Woglom.
Together they manage the American Century Equity Income, American Century Value, and American Century Mid Cap Value mutual funds.
Morningstar had nominated the value team for the 2014 award. Gruemmer was an analyst, rather than a portfolio manager, on the 2014 team.
In a story about the nominees, Morningstar noted the American Century team’s attention to companies’ management teams, investment returns on capital, debt levels and entry barriers that potential competitors face.
“This emphasis on quality, combined with a sharp focus on downside protection and capital preservation, has led to solid long-term results across the team's various charges and helped the funds get ahead during short market pullbacks in 2016,” Morningstar said.
Davidson came to America Century as a value-style investment manager when the company had built its reputation as a growth-oriented firm. Growth investing seeks companies that are expected to grow faster than their industry or the economy as a whole, in revenues, earnings or other measures.
Value investors seek stocks that are priced below their potential, perhaps because the company or industry suffered a recent event that left it bent but not broken.
Company spokesman Chris Doyle said American Century’s value investment discipline led by Davidson has since become the company’s largest, with $40 billion in assets. It is larger than American Century’s growth investment discipline and its fixed income discipline.
Morningstar will announce the winner of the award and others on Jan. 25. The domestic-stock fund manager award is one of four the company presents.
“To qualify for the award, managers’ funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long-term risk-adjusted performance and of aligning their interests with shareholders’,” according to Morningstar.