Volatile Macro Conditions Call for Long-Term Investing

Amidst macroeconomic uncertainty and market volatility driven by geopolitical tensions, inflation concerns, and tariff negotiations, American Century Investments suggests a focus on long-term investment strategies. Their co-chief investment officer, Keith Lee, CFA, argues that short-term volatility presents opportunities to acquire discounted companies based on long-term fair value estimates. The American Century Focused Dynamic Growth ETF (FDG), which seeks companies with strong fundamentals in early growth stages, has seen its NAV increase by nearly 24% over the last 12 months and over 9% in May, demonstrating the potential benefits of this approach.

Analysis

Current market conditions are characterized by significant macroeconomic headwinds, including persistent geopolitical tensions in the Middle East, heightened uncertainty surrounding inflation projections following a weaker-than-expected CPI report, and unresolved tariff negotiations. In this environment, American Century Investments advocates for a strategic shift towards long-term investment horizons, as articulated by Keith Lee, CFA, co-chief investment officer. Lee suggests that prevailing short-term market volatility can create attractive opportunities to acquire companies trading at discounts to their long-term estimated fair values, emphasizing an evaluation process that spans the entire corporate life cycle rather than focusing solely on quarterly performance. The American Century Focused Dynamic Growth ETF (FDG) is presented as an example of this approach, employing a disciplined, bottom-up stock selection process to identify companies with strong fundamentals in their early growth stages. FDG's reported net asset value (NAV) performance, with an increase of nearly 24% over the 12 months ending May 31, 2025, and a gain of over 9% in May 2025 alone, underscores the potential efficacy of its active management in capturing such discounted opportunities amidst ongoing market turbulence.

Key Decisions for Investors

• Given the prevailing macroeconomic uncertainties and market volatility, investors should consider prioritizing long-term investment strategies that focus on fundamental value over short-term market fluctuations.
• Investors may find opportunities to acquire quality companies at discounted valuations during periods of short-term volatility, aligning with a patient, long-term perspective on fair value.
• Consider actively managed investment vehicles, such as the American Century Focused Dynamic Growth ETF (FDG), which aim to identify and capitalize on early-stage growth companies potentially trading at appealing prices, particularly if their strategy aligns with navigating current market conditions.