ETFs have become popular in recent years, but as the space has grown, it’s been harder for individual funds to break out. One ETF in particular, however, may be poised to explode out of the blocks. That strategy, the American Century Focused Dynamic Growth ETF (FDG ), has outperformed the S&P 500 by 15% over the last year. Charging 45 basis points, FDG offers investors an active growth approach that could give the fund appeal as an underrated ETF to watch.
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FDG actively invests in large- and midcap U.S. firms with potential for rapid growth and profitability. That active remit has helped the fund produce its notable outperformance. Per YCharts, the strategy has returned 55.3% over one year. That compares well to the S&P 500 Total Return Index (SPXTR) which returned 40.8%. It also beats both the fund’s ETF Database Category and FactSet Segment averages. Those metrics come in at 38.4% and 26.4% over the last year.
Per its most recently reported holdings, the fund focused heavily on tech. According to ETF Database holdings analysis, its top sectors included tech services, electronic tech, and health technology. That, of course, lines up with the current market. The strategy’s case as an underrated ETF, however, stems from its active approach. By investing actively, the fund has been able to identify opportunities and beat the broader market by a significant margin.
Looking ahead, the fund’s underrated ETF status could slip, especially if rate cuts continue and boost its popularity. An active growth approach could leverage those cuts and cheaper borrowing, and identify those firms best positioned to benefit. For investors looking for an ETF that could outperform, FDG presents an appealing case to watch.
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