What better way to get a sense of an ETF than to understand its stocks? One key challenge for investors right now — avoiding overconcentration risk from the big, big tech names — merits looking for strategies outside that space.
An active growth ETF that looks for firms that meet growth of fundamental metrics outside that top list could provide a strong option. In this case, the American Century Focused Dynamic Growth ETF (FDG) could appeal, with three stocks outside of the big mega-cap techs.
See more: As Advisors Underweight Large Cap Growth, Try FDG
FDG charges 45 basis points for its exposures. The strategy invests in large- and midcap names with potential for high growth and profits. It crafts a portfolio of 30 to 45 firms best-suited for long-term capital appreciation. It looks to outperform the benchmark through strong stock identification. So what kind of stocks can be found in the active growth ETF?
Intuitive Surgical works on robotics in medicine and surgery, particularly. The stock has returned 48.4% for investors over the last three years, according to YCharts. That compares well to just 32% in returns for the S&P 500 Total Return Index (SPXTR). Though it has a high P/E ratio, it continues to offer appealing earnings-per-share (EPS), with a 51% quarterly year-over-year (YoY) growth rate for its diluted EPS.
HubSpot, Inc. has shown its performance over a longer time frame than ISRG has. It has returned much more than ISRG as an investment over five years, per YCharts. HUBS has returned 268.1% over five years. The company provides cloud-based marketing, sales, and customer service on its software platform. It has seen 23.1% quarterly YoY revenue growth, per YCharts.
Regeneron Pharmaceuticals (REGN)
REGN works on products that fight eye and cardiovascular diseases as well as cancer, per YCharts. The firm’s P/E ratio appeals quite a bit, at about 22.6. It has returned 225.5% over the last five years, which also outperformed the SPXTR in that time.
Together, those stocks represent some intriguing finds by the active growth ETF, which has returned 33.6% over the last one-year period. For those investors looking for a solid long-term hold in an active growth format, FDG may appeal.
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