Kip 25

American Century Small Cap Value (ASVIX) Joins the Kiplinger 25

American Century's small-cap-focused ASVIX consistently delivers high returns with average risk, and bears little resemblance to its benchmark.

When a Kiplinger 25 fund closes to new investors, we replace it. That's because we believe the funds on our list should be available to all readers.

So even though we still like Wasatch Small Cap Value (WMCVX), because it closed to new investors in mid-March we are casting it out of the Kiplinger 25 and replacing it with American Century Small Cap Value (ASVIX).

ASVIX is small-cap and value-focused through and through.

“We buy high-quality companies trading at attractive prices because of a transitory event,” says Jeff John, who manages the fund with Ryan Cope.

Holdings in Small Cap Value have an average market value of $2.3 billion – one-third less than the average of its peer group (funds that focus on bargain-priced small companies). Compared with the Russell 2000 Value Index, which tracks bargain-priced small-company stocks, ASVIX's portfolio boasts a lower average price relative to book value, or the value of a company’s assets minus its liabilities.

But quality matters most at Small Cap Value. When John, Cope and three dedicated analysts analyze prospective investments, each company receives a quality grade that scores its financial health, balance sheet strength and management.

The best holdings gen­erate plenty of free cash flow (money left over after expenses necessary to maintain the business) and reinvest it wisely.

“We’re not going for home runs. We’re looking for singles and doubles,” says John. “Stocks with the highest conviction and quality scores have the biggest weighting in the fund.”

The result is a portfolio that bears little resemblance to the Russell 2000 Value benchmark. The fund holds far more of its assets in tech and consumer stocks, for instance, while energy and materials firms count for less.

“We need a differentiated portfolio to get differentiated returns,” says John.

The fund consistently delivers high returns with average risk. Since John took over as portfolio manager in 2012, Small Cap Value has returned 14.2% annualized, which beats its benchmark and its peers. (Cope became a manager last year.) Two strong performers over the past year are financial services firm Signature Bank (SBNY) and Penske Automotive (PAG), which operates car and commercial truck dealerships.

Most Popular

How to Use Your Estate Plan to Save on Taxes While You’re Still Alive!
estate planning

How to Use Your Estate Plan to Save on Taxes While You’re Still Alive!

Upstream basis planning is a trust strategy that can save wealthy people on their capital gains taxes and income taxes associated with highly apprecia…
July 3, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
5 Ways to Prepare for a Recession
recession

5 Ways to Prepare for a Recession

The signs seem to be pointing in one direction these days, so if you’re worried about being ready for a recession, consider taking these five measures…
June 28, 2022

Recommended

Is the Stock Market Closed for the Fourth of July in 2022?
Markets

Is the Stock Market Closed for the Fourth of July in 2022?

Independence Day falls on a Monday in 2022, so the bond and stock markets will enjoy a long holiday weekend. Here's a look at the markets' holiday hou…
July 1, 2022
Top Bear Market Tips from 10 Financial Advisers
investing

Top Bear Market Tips from 10 Financial Advisers

When a bull market turns into a bear market, it can be hard to know what to do. Take comfort in the guidance of 10 financial professionals.
June 30, 2022
Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to
investing

Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to

More flexibility, more control, the potential for higher returns and tax-reducing strategies: With pros like that, could direct indexing be right for …
June 25, 2022
Janus Henderson Global Equity Income Fund Hangs Tough
Kip 25

Janus Henderson Global Equity Income Fund Hangs Tough

A focus on dividend payers and defensive stocks has kept the Janus Henderson Global Equity Income Fund afloat in a rough market.
June 23, 2022