Think you have enough allocated to large cap growth? You might be missing out. Recent research from Vanguard shows that many advisor portfolios are actually underweighting the space – by 12%, in this case. That may surprise investors who’ve heard plenty about megacap tech and a risk from overconcentration by big firms in the S&P 500, but for those needing more large cap growth exposure, FDG may appeal.
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FDG, the American Century Focused Dynamic Growth ETF, actively invests for a 45 basis point (bps) fee. The strategy hit its three-year ETF milestone last year, and has returned 35.8% over the last year per American Century Investments data. That outperformed the strategy’s benchmark Russell 1000 Growth Index, which returned 31.8% in that time.
While the above research suggests in part that that underweight may owe somewhat to investors using more small-cap or active, equal-weighted, or factor products, active large-cap growth strategies can get that active benefit without losing large-cap exposure.
Per VettaFi ETF Database data, FDG does have a 92% weight towards large caps. FDG looks for firms with potential for rapid growth and high profitability. Its active approach and closer scrutiny of funds can help sift through the large-cap growth world. That could prove especially helpful given the potential for an A.I. bubble in tech. At the same time, given the continued rate and inflation outlook changes, that active adaptability can help there.
For those investors concerned about large-cap growth in the first place, why get into the space? Contrary to reports and headlines, many of those big tech names like NVIDIA (NVDA) continue to see earnings match up reasonably well with share prices. Those big names can still play a big role in portfolios, with FDG one option therein.