American Century Equity Income Focuses on Value

This fund chooses high-quality but overlooked stocks.

Famed Hollywood director Howard Hawks is said to have defined a good film as one with three good scenes and no bad ones. The management team behind American Century Equity Income (symbol, TWEIX) takes a similar approach when it comes to undervalued large-company stocks. "Any value index will have stocks that do poorly and go to zero. If you avoid those firms that are significantly impaired or that have poor balance sheets, you'll do better than the index with less volatility," says comanager Phil Davidson. The fund's strategy goes beyond filtering out losing firms, but its performance reflects that basic tenet. Over the past 15 years, the fund's 8.2% annualized return beat that of its benchmark Russell 3000 Value index by 0.4 percentage point. Over the period, Equity Income was 33% less volatile than the benchmark and 29% less volatile than the broad stock market. (Returns are through September 30.)

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Ryan Ermey
Former Associate Editor, Kiplinger's Personal Finance

Ryan joined Kiplinger in the fall of 2013. He wrote and fact-checked stories that appeared in Kiplinger's Personal Finance magazine and on He previously interned for the CBS Evening News investigative team and worked as a copy editor and features columnist at the GW Hatchet. He holds a BA in English and creative writing from George Washington University.