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Thursday, February 24, 2011

Mutual Fund Review: American Century Heritage Fund

American Century Heritage Fund (TWHIX) is a mid-cap growth mutual fund with above average to high 3, 5 and 10 year rankings by both Morningstar and Lipper rankings. (americancentury.com). The fund came into existence in 1987, has assets over 1.25 billion U.S. dollars in worth which is invested primarily in U.S. securities in accordance with the fund's goals and governing policies. The American Century Heritage Fund is managed by two economists named David Holland and Greg Walsh, both of whom, have been at American Century Investments for at least 5 years.

The company itself is an established and highly charitable non-public asset management firm operated out of the U.S. Midwest. The TWHIX prospectus indicates the mutual fund comes in B, C and R classes. The class A American Century Heritage Fund shares charge a front end load of 5.75% of the purchase price whereas the B and C shares require no front end load but do have potential deferred and declining sales charges of UP TO 5% and 1% respectively. The R class shares require neither a front end load charge or a deferred sales charge. (2009 TWHIX Prosepctus)

American Century Heritage Fund performance


The American Century Heritage Fund has had a long-term life time performance return of 9.67% as of the 2nd quarter of 2009. The fund's expense ratio is reported by American Century Investments as being 1.01%. While these returns are not fantastic, they are not long-term negative and higher than U.S. money market and most certificate of deposit returns. Moreover, the companies 10 year return comes close to that of the Russell Mid-cap Index long term projected growth of 10.91% (russell.com)

Also, the fund's existence is in excess of 10 years giving it credibility in terms of longevity and transition through various economic and market conditions. Add to this the high marks afforded to The American Century Heritage Fund by Morningstar and Lipper, both well known mutual fund ranking organizations, a longstanding asset management company and relatively good short-term performance despite bad market conditions in 2008-2009 and this mutual fund generally stands as a performer on some level and in so far as mutual funds go.

Competitive positioning: American Century Heritage Fund


Few mid-cap growth funds come into near competitive with the American Century Heritage Fund at the 5 year level. However at the 3 month, 1 year and 3 year level the Yahoo finance top performers for this category of mutual funds include the following mutual funds in addition to MorningStar and Lipper high ranked mid-cap growth funds. These other mutual funds may or may not be truly competitive with TWHIX, however indications that they are may warrant further investigation in ascertaining a more refined competitive positioning of the American Century Heritage Fund class A.

• BB&T Special Opportunities Equity Classes A, B and C (BOPAX, BOPCX, BOPBX)
• Monteagle Informed Investor Growth (MIIFX)
• Monetta Mid-Cap Equity (MMCEX)
• FBR Focus Fund (FBRVX)
• Northern Mid Cap Growth Portfolio, Class A (BMGRX)

Additional factors to consider in assessment of the American Century Heritage Mutual Fund are its above average total annual assets turnover ratio of 178% as reported by Yahoo finance, the multiple classes of the fund, a contradiction between reporting in the fund prospectus and mutual fund reporting sites in terms of load fees, and the funds 40% down year percent ratio. (finance.yahoo.com) Despite potential discrepancies and questions regarding this funds performance and competitiveness, it has still maintained a long-term position among its competitors that may be worth consideration.

For a mutual fund with high recognition as a leader in its fund category, with relatively low expense ratio, sound investment principles and good long-term return, the American Century Heritage Fund (TWHIX) may be a mutual fund worth considering. As mutual funds go, this one may be a steady prospect.

Since the company that manages the fund is private, access to corporate asset management statistics and financial statements may be limited. Nevertheless, the American Century Heritage Mutual Fund is respectable mid-cap growth mutual fund as it pertains to its management, long-term fund performance, institutional ranking and competitive performance.

1 comment:

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