Fred Alger Management rolled out two new exchange-traded funds on Friday, bringing its ETF family to five funds. Unlike the rest of the firm’s entirely actively managed lineup, these newest additions are fully transparent.
An Actively Managed AI-Focused Strategy
The Alger AI Enablers & Adopters ETF (NYSE Arca: ALAI) has an expense ratio of 0.55% and is the issuer’s first thematic fund. Its strategy targets companies exhibiting what the prospectus terms “positive dynamic change.” Its managers seek out companies that are exhibiting “high unit volume growth” and “positive lifecycle change,” according to its prospectus. The former refers to companies that are seeing strong demand growth or are at the top of their respective markets. Meanwhile, the latter term refers to companies that are seeing positive outcomes from changes in regulation, innovation or management.
In the case of ALAI, the fund targets companies likely to see gains from their involvement in or association with artificial intelligence, designating them as enablers or adopters. The enablers are companies that help to develop the infrastructure that supports AI, while the adopters are the firms that actually make use of AI in their products and services or to improve how their company operates, the prospectus said.
ALAI at launch has a portfolio of roughly 45 securities, with Microsoft Corp. weighted at nearly 14%, followed by Amazon.com Inc. at 10.4%, and Nvidia Corp. at 9.1%. In fact, the portfolio includes six of the “Magnificent Seven” stocks in its top holdings, with Tesla Inc. coming in further down the list, with a weight of 0.7%.
U.S. Large-Cap Growth in a Concentrated Portfolio
The Alger Concentrated Equity ETF (NYSE Arca: CNEQ) also has an expense ratio of 0.55%. However, its focus is on the stocks of large-cap companies that the fund’s managers believe are likely to see future growth. The portfolio will generally hold the securities of roughly 30 U.S. companies, with at least one-quarter of the portfolio’s assets devoted to technology-related companies, according to CNEQ’s prospectus.
At launch, the ETF’s top holdings were Microsoft with a 15.6% weight, Nvidia Corp. at 9.8%, and Amazon.com Inc. at 9.1%.
Alger entered the ETF arena early in 2021. Its ETFs currently have roughly $55 million in combined assets under management.
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