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Investment idea - American Century Equity Income Fund

I recommend American Century Equity Income Fund (TWEIX) for mid-term investment with a target price of $10. The Fund's objective is current income with capital appreciation as a second objective. The Fund invests in securities with favorable income-paying history that have prospects for income payments to continue or increase. The Fund’s top-10 holdings include iShares Russell 1000 Value ETF (4.96%), WFC 7 ½ 12/31/49 (3.99%), BAC 7 ¼ 12/31/49 (3.74%), Procter & Gamble (3.01%), Pfizer (3%), INTC 2.95 12/15/35 (2.97%), Schlumberger (2.75%), MCHP 1 ⅝ 02/15/25 (2.68%), Cisco Systems (2.58%) and PNC Financial Services Group (2.5%).

UK’s vote last month to leave the European Union caused high volatility on financial markets. The situation has eased somewhat, still, uncertainty related to the effect of Brexit on global economic growth will prevail in the coming quarters and weigh on risky assets around the world. Besides, uncertainty still exists over Fed’s rate hike timing.

Against this uncertain backdrop, the addition of low-risk mutual funds to one’s portfolio may prove prudent investments. And American Century Equity Income Fund, with 3-year beta and Sharpe ratios of 0.66 and 1.25, respectively, in my opinion, could be a nice choice. The Fund has demonstrated solid growth this year but, I believe, still has upside potential.