American Century Investments

[wrigley]

Thoughts on American Century Investments. My son is a new elementary school teacher this upcoming school year and one of his options in his 403(b) are mutual funds with this company.

Thanks
Mike

 

[SumDay]

Are AC funds the only options? What are the fees?

I think they're a solid company, but I've heard their fees are high. I have no experience with them.

 

[wrigley]

Are AC funds the only options? What are the fees?

I think they're a solid company, but I've heard their fees are high. I have no experience with them.

Here's his options. I will admit I have ignored the annuities so far.
1. American Century Investments Mutual Funds
2. AXA Equitable Annuities
3. Plan Member Financial Mutual Funds
4. Security Benefits Annuities
5. TIAA - CREF
6. VALIC Annuities
7. VOYA (formerly ING Retirement) Annuities

Mike

 

[MRG]

I w*rked with some folks who were ex-American Century funds employees and a few current ones. Interesting company, people either love or hate the culture(I remember comments about mandatory group walks). One guy I've known for 35+ years, he was riffed back in 08. His investments are with Vanguard now.

I need eye surgery and cant see there ER, keep in mind the industry average is around .5. It's not a terrible place, but there may be other better options.

ETA - saw the other choices, like a whose who of old Megacorp names. AC isn't a bad choice for what's available.

 

[Mr._Graybeard]

American Century Ultra (then Twentieth Century) was one of the first mutual funds I ever invested in. Decent fund; fees weren't too bad relative to the standard then. They were growth stock specialists back then. At some point in the late '90s they merged with Benham, a bond fund house that has also been around for some time, to become American Century.

Since then they've expanded their portfolio of funds to offer something for everybody. I don't think they offer much in the way of low-cost index funds. For an active manager I don't think their fees are way out of line, but there are certainly cheaper options. Fund performance -- looking at the lineup I don't see anything spectacular going on in terms of growth or losses.

 

[gwraigty]

American Century Investments was formed when Twentieth Century Investments merged with Benham Group around 1996/1997. Twentieth Century was a well-known name among mutual fund investors at the time. I was in their Ultra fund myself for a while. I don't have any of my investments in their funds now. There are better options out there, IMO.

How much is the company match?

 

[Qs Laptop]

Thoughts on American Century Investments. My son is a new elementary school teacher this upcoming school year and one of his options in his 403(b) are mutual funds with this company.

Thanks
Mike

My wife's 401k was with them for about 10 years, 1994 through 2003 or thereabouts. They have some decent choices, but overall, I would rate them about average. Their expenses are a touch on the high side, but not terrible.

I liked the Heritage fund in the mid cap growth (I still hold some of it in an IRA). It shot up incredibly the four or five years after the market crash of 2009. Wasn't that great the past two years but is doing fabulously this year, much better than most mid caps. This is the only one of their funds I kept and the only one that I can recommend without reservations.

The Equity and Income fund was a decent growth + income fund. Boringly reliable.

I made a lot of money on the Ultra fund in the 90's but it crashed in the tech bubble and is just now regaining some of its good reputation.

They have a really good real estate fund, but I was only in it for about a year.

I didn't think their bond funds were very good.

To summarize, unfortunately not many of their funds beat the index. There are a couple of their funds that are pretty good, but overall you could do better elsewhere.

 

[Qs Laptop]

To summarize, unfortunately not many of their funds beat the index. There are a couple of their funds that are pretty good, but overall you could do better elsewhere.

I was composing this post and didn't see your son's other options until now. Maybe you can't do better elsewhere. I'd look carefully at TIAA-CREF's offerings and compare them to American Century. Can he mix and match across the choices or does he need to pick one company only?

 

[OldShooter]

The first step (for any 401(x)) is to get a copy of the fee disclosure form 404(a)(5). More than you wanted to know: https://www.dol.gov/sites/dolgov/fi...improve-transparency-of-fees-and-expenses.pdf This form will show your son what fees his account will be charged in addition to mutual fund management fees. The right number is zero. I have seen numbers as high as 1.5% though I have not studied the subject enough to know that there are not higher numbers out there.

If the fee is outrageous, then your son should put enough in to get any match, then open his own IRA or Roth for the balance of his savings.

Next step is to look at the funds and their management fees. The right answer here is a total market fund with a fee of under 0.2%. Same story, if the fees are outrageous or the options are poor, then save elsewhere.

Outside the American funds, ignore all annuity options but also look at what the TIAA offering is. It might include some attractive funds. Or maybe not. They have a reputation for being low cost.

But the big takeaway I suggest is that he should not automatically consider himself to be limited to the 403(b) offerings from the school system. If they work, fine. If not, go elsewhere.

 

[wrigley]

I was composing this post and didn't see your son's other options until now. Maybe you can't do better elsewhere. I'd look carefully at TIAA-CREF's offerings and compare them to American Century. Can he mix and match across the choices or does he need to pick one company only?

Mixing...….we're not sure yet. He doesn't have that information.

I also looked at TIAA CREF, but the funny thing about them was the website information we got didn't show any of the funds available. We would have to call and talk to an agent to find out which funds were available to him. I thought that was rather fishy!

Mike

 

[OldShooter]

... I also looked at TIAA CREF, but the funny thing about them was the website information we got didn't show any of the funds available. We would have to call and talk to an agent to find out which funds were available to him. I thought that was rather fishy!

I would say "odd," not "fishy." TIAA has had a very good reputation over the years, especially for offering low cost products. I'd suggest making that call to get the fund information and also to ask why it is not simply provided on the web site. Once you get the tickers for the funds you probably won't need to talk to anyone at TIAA again.

 

[Mr._Graybeard]

TIAA has had some issues of late ... https://www.nytimes.com/2017/10/21/business/the-finger-pointing-at-the-finance-firm-tiaa.html

 

[Qs Laptop]

The first step (for any 401(x)) is to get a copy of the fee disclosure form 404(a)(5). More than you wanted to know: https://www.dol.gov/sites/dolgov/fi...improve-transparency-of-fees-and-expenses.pdf This form will show your son what fees his account will be charged in addition to mutual fund management fees. The right number is zero. I have seen numbers as high as 1.5% though I have not studied the subject enough to know that there are not higher numbers out there.

If the fee is outrageous, then your son should put enough in to get any match, then open his own IRA or Roth for the balance of his savings.

With the right fee number being 0%, you seem to be saying the administrator of the 403(b) employee plan should receive no compensation. Is that correct?

Starting his own IRA will have a contribution limit of $6,000 per year; the maximum amount in a 403(b) is $19,000. Even with the "outrageous" fees the employer matching amount will likely more than overcome the fee amount. There is also something to be said for the convenience of automatic payroll deductions into the 403(b) plan.

Next step is to look at the funds and their management fees. The right answer here is a total market fund with a fee of under 0.2%. Same story, if the fees are outrageous or the options are poor, then save elsewhere.

This is ridiculous. No employee plan investment fund outside of an index fund or ETF's is going to have expenses and fees under 0.2%.

Outside the American funds, ignore all annuity options but also look at what the TIAA offering is. It might include some attractive funds. Or maybe not. They have a reputation for being low cost.

TIAA-CREF would be a better choice than American Century. They have some attractive Lifecycle Retirement Funds, (though I'm sure OldShooter would say the fees are too high).

You can do some research on TIAA-CREF funds from this link:
List of All TIAA Investments Funds

 

[dtbach]

I had several Twentieth Century funds back in the 90's and early 00's. They didn't do too bad, at least about as well as any other funds I had. I got spoiled with Ultra but of course the dot com bubble burst hurt that fund VERY bad. Probably ended up with the same profit as a humble balanced fund.

 

[OldShooter]

With the right fee number being 0%, you seem to be saying the administrator of the 403(b) employee plan should receive no compensation. Is that correct?

Silly. Of course not. Are you just trying to pick a fight? Typically the employer pays some or all of the plan fees. Good employers pay all.

This is ridiculous. No employee plan investment fund outside of an index fund or ETF's is going to have expenses and fees under 0.2%.

True enough. And your point is?

That low-fee passive investing is the winning strategy is settled science, doubly so for a saver like this. The problem is that there are total market index funds charging unconscionable fees and it is important that DS does not unknowingly get into one of those.

TIAA-CREF would be a better choice than American Century. They have some attractive Lifecycle Retirement Funds, (though I'm sure OldShooter would say the fees are too high).

Neither you nor I have any information on what is available. Hence, offering advice on what to buy is a little premature.

Re fees, again we don't know. From @Mr._Graybeard's helpful link though, I am more suspicious than before. Possibly you are right and the fees are too high. Maybe the OP will tell us.

(For the OP, here is one of hundreds of links that show the importance of low fees. https://www.morningstar.com/articles/752485/fund-fees-predict-future-success-or-failure)

 

[razztazz]

I've been there for about 35 years. Everything said thus far is pretty much where it's at.

-- Decent Company. Have never had a problem.
-- All funds are managed in some ways so no indexing. They did have an S&P 500 index fund for a while when indexing started to become fashionable but their customers didn't want it!
-- None of the fees I thought, then or now, are out-of-bounds but, yes, an index fund would get you lower fees
-- Performance is all over the map. None sucked (or suck, in my opinion) but like any managed fund sometimes they lag the index, sometimes they do better.
-- For the last ....18...19...20...? years I have been on their Brokerage side not their straight mutual fund side. I have kept "the big bucks" mostly in SPY's for the jaw-droppingly low fees, with the rest in one of their money market funds.
-- I have never had any intention of cutting and running to Vanguard or Fido just for fractionally lower fee mutual funds. I just can't bring myself to move my life's savings from one place to another without a life threatening reason. Besides via the brokerage I can invest in Vanguard funds if I want.

 

[pjm-7]

Both ACI and TIAA are good companies for 403(b) plans. TIAA fees will be lower. Somewhere in the plan documents will be the class of shares that the plan is using. The fees of retirement class will be different than what is on the website. In both cases you may need to call a representative to get the share class and fee information.