ETF Intel Q&A: American Century Investments

Gabrielle Vennitti, Senior Manager of ETF Listings at Nasdaq, speaks with Sandra Testani, Head of ETF Product and Strategy at American Century Investments, about the firm’s expansion in active ETFs, including the Avantis U.S. Quality ETF (AVUQ) and Avantis Credit ETF (AVGB), designed to deliver diversified, cost-efficient investment solutions.

1. Could you share more about American Century's overall strategy for launching new products?

The goal of American Century is—and always has been—to deliver a comprehensive suite of investment solutions that are effective over the long term to help our clients achieve their goals. Recognizing that many investors prefer the tax efficiency, intraday trading, and transparency of ETFs, we launched our first ETFs in 2018 and established our Avantis Investors’ investment capabilities in 2019 to meet those needs.

2. This year, you launched two new ETFs on Nasdaq: The Avantis U.S. Quality ETF (AVUQ) and the Avantis Credit ETF (AVGB). Could you provide some insights into these products?

The Avantis Investors strategies are all managed under a consistent philosophy and use a time-tested, academically supported investment approach. We use information in market prices and company financials to discern differences in expected returns among securities and build portfolios that have higher expected returns*, are broadly diversified, low-cost, and managed with an active investment process designed to reduce costs and mitigate unnecessary risks.  AVUQ expands this investment philosophy to U.S. growth equities across market capitalizations, market sectors and industry groups. It has an expense ratio of 0.15%.

AVGB invests primarily in investment-grade quality debt obligations from a diverse group of U.S. and non-U.S. issuers. It has an expense ratio of 0.18%.

3. What makes a debt ETF like AVGB essential for investors to include in their portfolios?

Just as in equity allocations, in fixed income allocations, we see investors seeking to capitalize on diversification benefits by looking beyond the U.S. market.  AVGB offers another tool for investors who want an expanded opportunity set to identify higher expected returns* across global fixed income markets.

4. Lastly, are there any trends in the market or specifically in ETFs that you believe investors and the ETF industry should be aware of as we approach the end of 2025?

American Century ETFs (including Avantis) recently surpassed $85B in ETF AUM. Perhaps surprising to some, most of our assets are actually active. Active ETFs have experienced significant growth – from less than $50 billion when we launched in 2018 to over $1.1 trillion today in the U.S. Active ETFs account for roughly 10% of total ETF AUM, but year-to-date, they have received more than 35% of the flows.  We think the drivers of Active ETF growth are the benefits of ETFs (cost-effective, tax efficiency) plus potential for outperformance, for improved outcomes, flexibility to navigate uncertainty and not being beholden to what can be arbitrary index rules.