Traditional index fund investments may provide broad market exposure, but they may also dilute access to some of the best ideas on the market today. How can financial advisors safely invest their funds without capping their portfolio’s potential?
In the upcoming webcast, Don’t Dilute Your Dollars with an Index-Only Strategy, Amy Zhang, Executive Vice President, Portfolio Manager, Alger, will focus on a mid-capitalization fund strategy targeting today’s high-conviction stock picks.
Specifically, the actively managed Alger Mid Cap 40 ETF (FRTY), which is managed by Zhang, will seek out 40 high-conviction mid cap growth stocks. The strategy primarily invests in a focused portfolio of approximately 40 holdings of mid cap companies identified through Alger’s fundamental research as demonstrating promising growth potential.
Zhang has been with Alger since 2015, and manages several of Alger’s small- and mid-cap strategies, including the Alger Small Cap Focus Fund, a five-star Morningstar rated fund.
Alger has licensed ActiveShares from Precidian Investments, LLC, enabling the firm to deliver actively managed investment strategies in an ETF vehicle without disclosing holdings daily.
According to the fund prospectus, the ETF manager believes companies undergoing Positive Dynamic Change offer the best investment opportunities. Positive Dynamic Change refers to companies realizing High Unit Volume Growth or companies undergoing Positive Lifecycle Change. High Unit Volume Growth companies are traditional growth companies experiencing, for example, rapidly growing demand or market dominance. Positive Lifecycle Change companies are, for example, companies benefiting from new regulations, a new product innovation, or new management.
As investors look over their equity market exposure, they may find that large cap stock positions are too big for rapid growth and small caps to volatile in the short-term. Middle capitalization stocks, sometimes referred to as the market’s sweet spot, can help investors achieve improved risk-adjusted returns.
Mid cap companies are slightly more diversified than their small cap peers, which allows many to generate more consistent revenue and cash flow, along with more stable stock prices. Many are not so big that their size slows down growth.
Financial advisors who are interested in learning more about the mid-cap strategy can register for the Monday, May 24 webcast here.