
On this episode of “ETF of the Week” podcast, VettaFi’s Head of Research Todd Rosenbluth joined Chuck Jaffe of Money Life to talk about the Fidelity Blue Chip Growth ETF (FBCG ).
Chuck Jaffe: One fund, on point for today; the expert to talk about it. Welcome to The ETF of the Week.
Yes, it’s the ETF of the Week, where we examine trending, new, newsworthy, unique and intriguing exchange traded funds with Todd Rosenbluth, the head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools and research that you need to make yourself a better investor in ETFs.
Todd Rosenbluth, happy New Year. It’s great to chat with you again.
Todd Rosenbluth: Great to be back Chuck. Happy New Year.
Chuck Jaffe: Your ETF of the week is…
Todd Rosenbluth: The Fidelity Blue Chip Growth ETF (FBCG ).
Chuck Jaffe: FBCG, the Fidelity Blue Chip Growth ETF. Now of course, this is the ETF companion to one of the oldest, old line, most successful funds out there — the Fidelity Blue Chip Growth Fund, which is FBGRX. So why this fund, in ETF version, now?
Todd Rosenbluth: Well, this is the ETF of the Week, so we’re going to talk about an ETF, not a mutual fund. But the Fidelity Blue Chip Growth ETF had a tremendous year in 2024. It significantly outperformed its peers. It did so in back-to-back years. It’s repeated its success; in the last two calendar years, it’s been among the top performing large-cap growth strategies, let alone being an ETF.
But what we like about it is that people are talking about whether or not we’re going to see a shift in momentum, shift in focus. Those mega-cap growth stocks, whether they can continue to have their success. We’re not sure if they can or if they can’t. But here, with the help of Fidelity, you get the expertise of an active manager and the efficiency and liquidity of an ETF.
So, proven manager, proven track record, almost exactly the same strategy that people know of, in the ETF wrapper.
Chuck Jaffe: It is. But I got to start with one thing. You know, when I was young and learning about investing, “blue chip” was thrown out all the time. Today, it’s not a term that’s used very much.
And I’m not sure that most young investors, or new investors, truly know what a blue chip stock means. Because today, “blue chips” is just another way of normally saying large-cap growth. Or is it more complicated than that? And is there a real benefit to blue chip as a definition in the name here?
Todd Rosenbluth: So, “blue chip,” to me, means quality; that’s synonymous with the term quality. “Blue chip” is a phrase that’s used more often within the active management world. Because there’s subjectivity as to whether a company is high quality enough to make it into the portfolio.
If we look — and people should look at what’s inside the portfolio — they’re going to see a lot of those mega-cap growth stocks that led the market the last couple of years. Nvidia, Apple, Microsoft — those are most likely to be in there. But what’s compelling to me is that there’s more than that. Carvana was one of the success stories for this ETF in 2024, according to Fidelity’s fact sheet and additional information. That’s a stock that people probably are familiar with, but it’s not necessarily those mega-cap growth stocks.
So, it’s worth looking inside the portfolio to see whether your or somebody’s objective definition of “blue chip” meets the criteria for what’s inside the fund. But I think of it as another way of quality growth companies.
Chuck Jaffe: I know we’re here to talk ETFs and not mutual funds, but there are some things that would make people want to compare the two. And I know that you prefer the ETF wrapper. In fact, everyone tends to prefer the ETF wrapper these days. That’s why the ETF side of the business is growing and the traditional mutual fund business is slowing.
But here’s an interesting fact for you about Fidelity Blue Chip Growth — the ETF, FBCG — versus Fidelity Blue Chip Growth, the fund. In 2023, FBCG the ETF was up just a hair under 58%. And in 2024 it was a hair over 39%.
Meanwhile, the mutual fund — well, in 2023 it was 55.5%, so a couple of points less. But in 2024, it was up closer to 40%, so almost a point more. Is there a reason why you’d want to own one wrapper or the other? For somebody who’s out there who goes, “Hey, I’ve been a long time blue chip growth shareholder in the fund. Is there a reason to switch?” Is this a case where, because you have it in both variants, you really want to dig in to look at both before you buy either?
Todd Rosenbluth: So, if you already are a long time owner of the mutual fund version of this strategy and you’re happy with how the the fund is performed — which you should be, because it’s been a, it’s a five-star fund, according to Morningstar. It’s had a great track record over all. You should do nothing but be hearing that you and I are talking about Fidelity Blue Chip Growth in a positive manner.
You should not sell one mutual fund to buy a nearly identical ETF for a little bit of the fee savings. Because you’re going to have embedded taxes and capital gains that you’re going to unlock, unfortunately, when you sell that mutual fund at any point. So, if you’re going to sell a mutual fund, it should be for the right reasons. Shifting strategies, the manager has left — it hasn’t, in this case — or you want to go to a more index-based approach.
We think Fidelity Blue Chip Growth mutual funds’ strong track record should be an indication to people who are believers in ETFs but don’t currently have exposure to the strategy and want the tax efficiency, the liquidity, and the lower fee. If you’re a new investor, Fidelity Blue Chip, the ETF, is a worthwhile ETF to be considering in 2025.
Chuck Jaffe: I do know that we have a couple of members of our audience who are really wonky about their numbers, etc. They would point out that because the ETF and the fund are effectively one and the same, just different… It’s basically the same chassis, slightly different. The way a Volkswagen and an Audi are the same chassis, just different from the top down or what have you.
They would say you could move from one to the other and not trigger capital gains because it would be a wash sale, etc. But we aren’t giving tax advice. We’re just telling the wonky people that we understand what the rules are. If you think you can do it, you want to check with your tax provider. Don’t yell at us.
Todd Rosenbluth: Yeah, agreed. Not offering any tax advice. But for ETF-oriented investors — and that’s likely who’s listening to this conversation as opposed to having moved forward, waiting for somebody to talk to mutual funds or to talk individual stocks — this is a worthwhile ETF. It is an actively managed, large-cap growth strategy with a strong track record as an ETF. The firm and the manager have a strong track record for the mutual fund as well. You get high quality, large-cap growth companies, but the benefits of an active manager determining whether it’s the right time to hold on to a position or the right time to sell it. So, we think this is a great strategy from Fidelity.
Chuck Jaffe: And in terms of where this fits in a portfolio, obviously this is built to be a core holding. But say somebody has got quality ETFs because quality has been a factor that they’ve dug in on. You’re focused on the quality in blue chip — do they not do this because it has overlap? Do you worry too much about the overlap with the big names? Or is this a quality fund, a core position for somebody who’s looking for a core position?
Todd Rosenbluth: So, I think this could be a core position for many people who believe in active management. Now, you could pair this active ETF with a low cost, index-based product and split your large-cap or your large-cap growth bucket between the two. So you get the benefits of active management, but you’re not paying as much for just one fund.
You can split that with a very low cost S&P 500 or QQQ ETF that’s a little bit more growth-oriented. This is not a tactical call. This fund has performed well the last couple of years. We think many people still want to get exposure to those mega-cap growth-oriented companies. We think you get the benefits of an active manager with a strong track record to lean on.
Chuck Jaffe: It’s FBCG, the Fidelity Blue Chip growth ETF. The ETF of the Week from Todd Rosenbluth at VettaFi. Good one, Todd. I’ll see you again next week.
Todd Rosenbluth: I’ll see you next week, Chuck.
Chuck Jaffe: The “ETF of the Week” is a joint production of VettaFi and Money Life with Chuck Jaffe. And I am Chuck Jaffe, and you can learn all about my show by going to MoneyLifeShow.com by finding it where you find your favorite podcast.
You want to find out about your favorite ETFs, or what might be your new favorites? Go to VettaFi.com, where they’ve got all the research you need to be a better investor. They’re on X @Vetta_Fi. Todd Rosenbluth, their head of research, my guest — he’s on X, too, @ToddRosenbluth.
The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by subscribing on your favorite podcast. And we’ll bring you another ETF to consider next week. Until then, happy investing everybody.
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