Navigating Volatility: A Deep Dive into American Century High-Income Fund's Q2 2025 Performance

As we reflect on the second quarter of 2025, the global economic landscape continued to present a complex interplay of opportunities and challenges for high-income investors. The American Century High-Income Fund successfully navigated these dynamic conditions, delivering a commentary that underscores its strategic resilience and commitment to yield generation amidst shifting market tides.

This period was characterized by persistent, albeit moderating, inflation, a Federal Reserve maintaining a cautious stance on interest rates, and evolving geopolitical developments that influenced credit market sentiment.

The quarter saw mixed signals from economic indicators. While some sectors demonstrated robust growth, others felt the pinch of higher borrowing costs and consumer spending adjustments.

Corporate earnings, on average, held firm, but credit spreads, particularly in the high-yield segment, experienced periods of widening and tightening reflecting investor apprehension and subsequent re-engagement. Our fund managers meticulously monitored these nuances, employing a disciplined approach to identify compelling risk-adjusted opportunities.

During Q2 2025, the American Century High-Income Fund demonstrated a commendable performance, outpacing its benchmark amidst a backdrop of moderate market volatility.

The fund's strong showing was primarily driven by astute security selection within the high-yield corporate bond market and a judicious allocation to select emerging market debt. Our emphasis on fundamental credit research proved invaluable, allowing us to pinpoint credits with robust balance sheets and sustainable cash flows, even as broader market sentiment ebbed and flowed.

Key contributors to performance included strategic overweight positions in the energy and healthcare sectors, where strong underlying fundamentals and resilient demand provided a buffer against broader market headwinds.

Conversely, our disciplined approach to industries facing structural challenges, such as certain segments of retail and commercial real estate, helped mitigate potential downside risks. Duration management also played a crucial role, as our managers deftly adjusted exposure to interest rate fluctuations, protecting capital while optimizing income generation.

Looking ahead, the outlook for the high-income market remains nuanced.

We anticipate continued vigilance from central banks regarding inflation, which could lead to sustained higher-for-longer interest rate scenarios. However, the search for yield in a world of persistent low growth is likely to keep demand for high-income assets robust. Our strategy for the remainder of 2025 will continue to focus on fundamental credit analysis, emphasizing companies with strong free cash flow generation and manageable debt profiles.

We will also remain opportunistic in sectors offering attractive valuations, while maintaining a diversified portfolio to mitigate idiosyncratic risks.

The American Century High-Income Fund remains committed to providing investors with a compelling income stream through careful credit selection and proactive risk management.

We believe that by adhering to our rigorous investment philosophy and adapting to market conditions, we are well-positioned to navigate the evolving economic landscape and pursue attractive returns for our shareholders in the quarters to come.