The overarching theme in big tech continues to center on the growth mechanism provided by artificial intelligence (AI). Certain exchange traded funds (ETFs) can continue to ride this wave. There are active funds that not only provide big tech exposure, but extend beyond that sector in order to truly focus on growth opportunities.
In the meantime, getting big tech exposure is almost perfunctory in the current market. 2024 didn’t start with an extension of last year’s market rally in the early weeks of January. Still, certain members of the “Magnificent Seven” ended strong thanks to positive earnings reports.
Online retail giant Amazon along with Facebook owner Meta are showing signs that the big tech market rally is still alive and well. Per a Financial Times report, the latter saw the “biggest-ever one-day increase in a company’s market value” while the former was buoyed by strong holiday shopping numbers in the final quarter of 2023.
But as mentioned, growth doesn’t mean simply adding names from the “Magnificent Seven,” tailoring the allocations, and calling it a growth fund. One ETF on the market offers a high-conviction portfolio with a growth slant is the American Century Focused Dynamic Growth ETF (FDG). That portfolio does include household names in big tech. However, it also reaches beyond that in order to truly capture growth opportunities in the current market.
Getting Ahead of Growth
One of the challenges in getting growth exposure is to get ahead of said growth before it occurs. Being that FDG is actively managed, it means experienced market professionals can locate opportunities not only in big tech, but outside of that realm. FDG also invests in companies that are in their early and rapid growth stages. The fund’s managers look for companies with a competitive advantage, profitability, and scalability that other managers may overlook.
Furthermore, that active management component means that the fund stays pliable given current market conditions. That allows portfolio managers the ability to add or reduce holdings as necessary to capture more upside or protect the downside.
The focused approach also applies to the number of holdings in FDG. Given its discernible filter, investors won’t see hundreds of companies in its portfolio. Instead, the fund is limited to just 37 select holdings (as of 12/31/23). Its top 10 holdings comprise about 55% of the fund. The top three exposure tilts toward the familar information technology sector where big tech thrives. It also includes consumer discretionary and healthcare. Currently, the aforementioned Amazon is its top holding, followed by NVIDIA and then Tesla.
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