Exchange-traded funds (ETFs) have become increasingly popular over the years as a way to get diversified access to the market, whether it is for a certain sector, style, or industry or across a much broader scope. There are ETFs for just about every segment of the market, including a growing number of actively managed ETFs.
In particular, two ETFs from big-name asset managers are currently trading at less than $20 per share. Both are aggressive growth funds that are worth a look for investors looking to add some alpha to their portfolio without having to pick the winners themselves.
Fidelity Growth Opportunities ETF
The Fidelity Growth Opportunities ETF (BATS:FGRO) is based on the popular and long-running mutual fund of the same name, which has been around since 1987. It has only been around in ETF form since 2021, but it has a long track record of success as a mutual fund.
FGRO is an actively managed ETF run by Kyle Weaver and Michael Kim, who also manage the mutual fund. It invests in stocks the managers believe have above-average growth potential, with fundamental analysis that looks at a variety of factors, including the financial condition and industry position of the stock and market and economic conditions.
FGRO currently holds about 118 stocks, with the top three holdings as of Aug. 31 being Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG).
The ETF, which is trading at just over $16 per share, is up about 27.3% year to date as of Oct. 24, and for the past one-year period, it has returned 24.5%.
To get a longer-term sense of the ETF’s performance, the Fidelity Growth Opportunities mutual fund has a 12.7% annual return over the past five years as of Sept. 30. The mutual fund has returned 14.6% annually over the last 10 years and 11.6% annually since its inception in 1987. The fund’s expense ratio stands at 0.59%.
ARK Fintech Innovation ETF
The ARK Fintech Innovation ETF (NYMARKET:ARKF) is run by ARK Invest, the asset management firm run by the famed investor Cathie Wood. This actively managed ETF is one of the firmʻs newer funds, having been launched in 2019. However, it is managed by Wood herself, who also runs the flagship ARK Innovation Fund, among others.
As the name suggests, ARKF invests in innovative companies in the fintech space that have a technologically enabled product or service with the potential to change the way their industry works. More specifically, it offers multi-cap exposure to companies that specialize in mobile payments, digital wallets, peer-to-peer lending, blockchain technology and risk transformation.
ARKF typically holds between 35 and 55 stocks, with the three largest holdings as of Sept. 30 being Coinbase Global (NASDAQ:COIN), Shopify (NYSE:SHOP) and DraftKings (NASDAQ:DKNG).
The ETF is trading at only about $18.83 per share as of Oct. 24. It has returned 29.7% year to date and has a one-year return of 19.1%. Its three-year annualized return is -24.2%, but that includes the 2022 bear market. Its expense ratio stands at 0.75%.
FGRO vs. ARKF
Of the two ETFs, the Fidelity Growth Opportunities ETF is probably the better choice because it is more diversified and not just focused on a single sector or industry. It also has a lower expense ratio.
However, the biggest advantage this fund has is its track record. This has been a high-performing fund for a long time, and the fact that it is available in ETF form at this low entry price makes it one to put on your radar.
The ARK Fintech Innovation ETF is a bit more of a risky play, as it is more concentrated and sector-oriented. However, given its pedigree and focus on high-flying fintechs, it would certainly be a worthy option for filling a smaller, aggressive growth role in a portfolio.
Disclaimer: All investments involve risk. In no way should this article be taken as investment advice or constitute responsibility for investment gains or losses. The information in this report should not be relied upon for investment decisions. All investors must conduct their own due diligence and consult their own investment advisors in making trading decisions.
