Among the various investment styles out there, growth investing may be one of the most intriguing right now. While simple rate cuts alone may not benefit growth stocks, sufficiently quick rate cuts could, according to research from data analytics firm Confluence. That could speak to the appeal of growth investing overall.
The challenge for investors, then, is finding the right way into the space. Investors can consider a wide array of ETFs, and these active ETFs offer varied fundamental and quantitative strategies to access growth.
The Fidelity Fundamental Large Cap Growth ETF (FFLG)¹
First off in growth investing, FFLG may appeal. The strategy takes an active approach, looking for large cap firms with growth measured by earnings or revenue. It looks for stocks using fundamental research factors like financial condition and industry position. Finally, it also incorporates a quantitative portfolio process to optimize “high conviction” stocks. Charging 38 bps, the strategy has returned 49.95% over one year as of April 8 per VettaFi data.
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FFLG leans on the experience of multiple managers who look for growth companies through different lenses. While providing that wide view, it maintains strict concentration and risk parameters to keep the portfolio in its Morningstar Style box. FFLG’s portfolio construction approach seeks to blend managers together in order to harness their collective insight while seeking to deliver a smoother ride than each of the individual managers might accomplish alone.
The Fidelity Blue Chip Growth ETF (FBCG)
Next, FBCG may appeal for growth investing given its high level returns. FBCG has returned 57.94%over one year, per Fidelity data as of February 29. Portfolio manager Sonu Kalra focuses on companies with above-average earnings growth potential with sustainable business models, but still leaves room for fast growers that could become the blue chips of tomorrow.
The Fidelity Enhanced Large Cap Growth ETF (FELG)
Finally, with a track record dating back to 2007, FELG converted from a mutual fund this past November. FELG’s approach to growth investing charges just 18 bps. In doing so, it has returned 12.32% YTD as of April 8 per VettaFi data.
So, what does it do to set itself apart? The ETF’s disciplined portfolio construction targets exposure similar to the Russell 1000 Growth index, but, leaning on its stock selection process, it seeks to systematically identify stocks with attractive characteristics by leveraging Fidelity’s proprietary take on quality, growth, valuation, and momentum. The strategy also looks at other nontraditional factors to seek a higher return than the index.
Taken together, the trio of ETFs each present an option for investors looking at growth investing. Should rates drop, they could potentially offer a route into strategies set to receive a boost from easier lending conditions.
For more news, information, and strategy, visit the ETF Investing Channel.
1. Prior to 2/26/24, Fidelity Fundamental Large Cap Growth ETF was Fidelity Growth Opportunities ETF. The fund implemented Portfolio Manager changes and underwent Investment Process changes on 2/26/24, under the new name of Fidelity Fundamental Large Cap Growth ETF. Please see the Prospectus for more details.
Fidelity Investments® is an independent company, unaffiliated with VettaFi. There is no form of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the information herein. Fidelity Investments has not been involved with the preparation of the content supplied by VettaFi and does not guarantee or assume any responsibility for its content.
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