As Advisors Underweight Large Cap Growth, Try FDG

Originally published May 21, 2024

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.