American Century is one option among many, not objectively the best

Whether American Century is the best mutual fund company depends entirely on what you need: low costs, specific investment styles, tax efficiency, or access through your employer plan. American Century does excel in some areas — their expense ratios tend to run below industry average, and they offer a wide range of fund types — but other companies may serve you better depending on your situation. The question "best" has no single answer because different investors have different priorities.

This guide walks through what American Century does well, where other companies compete, and how to think about the choice for your own portfolio.

Key Takeaways

  • American Century's funds typically charge lower expense ratios than the industry average, which means more of your money stays invested rather than paying fees.
  • The company offers both actively managed funds (where a manager picks stocks) and index funds (which track a market benchmark), so the choice depends on your investment philosophy.
  • Your access to American Century may be limited by your employer plan, brokerage, or tax situation — availability matters as much as quality.
  • Vanguard, Fidelity, and Schwab offer comparable or lower costs in many categories, plus broader fund selections and easier account access for individual investors.
  • The best fund company for you is the one whose funds you will actually hold long-term without panic-selling during market drops.

What American Century does well

American Century has built a reputation for keeping costs low. Their expense ratios — the annual percentage you pay to own the fund — average around 0.50% to 0.70% for actively managed funds, which is noticeably below the industry median of roughly 0.80% to 1.00%. Over 20 or 30 years, that difference compounds significantly. A fund charging 0.50% instead of 1.00% leaves you with measurably more money at retirement.

The company also manages funds across most major categories: U.S. stock funds, international stock funds, bond funds, and target-date funds (which automatically shift from stocks to bonds as you near retirement). This breadth means you can build a complete portfolio using only American Century funds if your plan or brokerage offers them. Their target-date funds in particular have a track record of reasonable performance and low turnover, meaning they do not trade constantly and trigger unnecessary tax bills.

American Century also operates with less marketing noise than some competitors. They do not spend heavily on television advertising or celebrity endorsements, which keeps overhead down and translates to lower fund costs for you.

Where other companies compete or win

Vanguard, the largest mutual fund company in the United States, offers expense ratios that are often equal to or lower than American Century's, particularly in index funds. Vanguard's S&P 500 index fund, for example, charges 0.03% annually — a fraction of what you would pay for an actively managed fund. Vanguard also has a unique structure: it is owned by its funds, which are owned by investors, so there is no separate profit motive pushing fees higher.

Fidelity competes aggressively on cost and breadth. They offer thousands of mutual funds, including many with no sales load (commission), and their index funds are priced competitively. Fidelity also provides extensive research tools and educational content, which appeals to investors who want to dig deeper. If your employer uses Fidelity for your 401(k), you may find it easier to consolidate accounts there.

Charles Schwab has entered the mutual fund space more recently but offers very low-cost index funds and a straightforward platform. Schwab's strength is integration: if you already have a brokerage account there, adding mutual funds is seamless, and their customer service is widely regarded as responsive.

T. Rowe Price, another major player, focuses heavily on actively managed funds and has a strong reputation in retirement planning. Their target-date funds are well-regarded, though their expense ratios run slightly higher than American Century's.

How your access to American Century may be limited

You cannot straightforward decide that American Century is best and then buy their funds. Your actual options depend on three things: your employer's 401(k) plan, your brokerage account, and your tax situation.

If your employer's retirement plan uses American Century, you have straightforward access to their funds with no transaction fees. If your employer uses a different provider — say, Fidelity or Vanguard — you may not be able to buy American Century funds inside that plan at all. You could buy them in a separate individual brokerage account, but that means managing two accounts and potentially paying transaction fees.

If you use a brokerage like Schwab or Interactive Brokers, you can usually buy American Century funds, but some brokerages charge transaction fees for mutual funds outside their own family. Vanguard and Fidelity brokerages waive fees for their own funds but may charge for others.

For taxable accounts (not retirement accounts), American Century's tax efficiency matters. Some of their actively managed funds generate fewer taxable gains than competitors, which is valuable if you are not in a tax-deferred account. But this advantage only applies if you hold the funds long-term.

The real question: what matters most to you

Picking the "best" fund company requires ranking your priorities. If your primary goal is the lowest possible expense ratio, index funds from Vanguard or Fidelity may edge out American Century. If you believe active managers can beat the market and you want a company with a solid track record, American Century is a legitimate choice. If you want one-stop shopping with research tools and customer service, Fidelity offers more.

But the single biggest factor in long-term investing success is not which company you choose — it is whether you stay invested through market downturns. The best fund company is the one whose funds you understand well enough to hold without panic-selling when the market drops 20% or 30%. If American Century's funds match your risk tolerance and investment timeline, they are likely good enough. If you would sleep better with index funds from Vanguard, that choice is equally valid.

How to compare funds across companies

Rather than comparing companies as a whole, compare specific funds side by side. If you are considering an American Century large-cap stock fund, pull up the expense ratio, the fund's 10-year return, and the turnover rate (how often the manager trades). Then compare those exact numbers to the same category fund from Vanguard, Fidelity, or Schwab.

Look at the fund's holdings too. Two funds with the same name might own very different stocks. American Century's value funds, for instance, tend to own smaller companies than some competitors' value funds, which means different risk and return profiles.

Check whether the fund is available in your 401(k) or brokerage without transaction fees. A fund with a 0.50% expense ratio is not a bargain if you pay a $25 transaction fee every time you buy it. The math changes if you are buying once and holding for decades, but most people do not think about that.

Frequently Asked Questions

Does American Century have index funds?

Yes. American Century offers index funds that track major benchmarks like the S&P 500 and the total U.S. stock market. Their index fund expense ratios are competitive, though Vanguard's index funds are often slightly cheaper. The difference is small enough that availability and account access usually matter more than the fee difference.

Can I use American Century funds in my 401(k)?

Only if your employer's plan includes them. You cannot choose which fund company your 401(k) uses — your employer selects the plan provider. If American Century is not an option, you can still buy their funds in an individual IRA or taxable brokerage account outside your 401(k).

What is the difference between American Century and Vanguard?

Vanguard is larger and offers lower expense ratios, especially in index funds. Vanguard is also owned by its funds, which theoretically aligns incentives with investors. American Century focuses more on actively managed funds and has a smaller fund selection. Both are reputable, and the choice often comes down to which funds are available in your plan.

Are American Century funds tax-efficient?

Some are. American Century's actively managed funds tend to generate fewer taxable gains than competitors because the managers trade less frequently. This matters only in taxable accounts, not in 401(k)s or IRAs where taxes are deferred. If tax efficiency is important to you, compare the fund's turnover rate and historical tax distribution to similar funds from other companies.

What if I want to switch from American Century to another company?

In a 401(k), you can usually move money between available funds with a phone call or website click, with no tax consequence. In an IRA or taxable account, you can sell American Century funds and buy others, but selling in a taxable account may trigger capital gains taxes. In a traditional IRA, there is no tax on the switch itself. Consult a tax professional if you are moving a large position.