This quarter, we address the potential return of stock market volatility and our investment process. Whatever the market conditions—“normal” or not, more or less volatile—we apply the same multifaceted approach. One reason we use that multifaceted approach is that the underlying drivers of stock performance go in and out of favor over time. Whether conditions can be deemed to be normal or something else, it makes sense that different companies and different stocks would do well at different times.
Read Wittman’s full Q1 2015 CIO Insight: Turn the Page, not the (Investment) Process
This balanced approach contributes to consistency of returns because of the interaction between the metrics. For example, the interplay between value and quality means our
process is not overly dependent on either a sustained risk-on or risk-off environment,
and instead should play itself out over the economic cycle. Similarly, growth works
best when in conjunction with measures of quality, valuation, and sentiment.
So, if volatility does indeed return to the markets, or we are faced with some other unforeseen outcome, we will continue to apply our objective, disciplined process. We believe that the systematic application of a process that uses multiple dimensions to evaluate companies provides the best opportunity for outperformance across different market environments.
The opinions expressed are those of Scott Wittman, CFA, CAIA, and are no guarantee of the future performance of any American Century Investments portfolio.
For educational use only. This information is not intended to serve as investment advice.