Top-Performing ETF Devoid of Significant Investments in Nvidia, Microsoft, or Apple in its Leading Positions.
Rewritten Article:
Many popular exchange-traded funds (ETFs) that have outdone the S&P 500 recently share a common thread: their top three holdings often include tech giants like Nvidia, Microsoft, or Apple. While these stocks offer exposure to impressive companies, their high valuations might deter investors from investing in ETFs heavily reliant on them. If there's a market correction, particularly in tech, these stocks could be vulnerable.
For investors keen on growth stocks yet preferring minimal exposure to the aforementioned tech giants, the American Century U.S. Quality Growth ETF (QGRO -0.18%) merits consideration. Let's delve deeper into this fund, uncovering why it could be an excellent long-term investment choice.
Boosting Diversification with Wide-Ranging Holdings
The American Century U.S. Quality Growth ETF houses approximately 200 stocks, with a weighted average market cap of about $407 billion. The fund's top three holdings are Netflix, Booking Holdings, and TJX Companies. Importantly, none of these three stocks makes up more than 4% of the ETF's total weight. This ample diversification reduces the risk that one or even a few poorly performing stocks could jeopardize the fund.
Although tech stocks weigh in at 37% of the ETF's holdings, their dominant presence is minimized by balancing exposure to various stocks. This setup makes American Century an appealing option for growth investors seeking diversity and risk reduction. You still get exposure to promising tech stocks, but with the diversification, you can reduce overall risk. Nvidia, Microsoft, and Apple are indeed part of the fund's portfolio, but they collectively account for not even 4% of its total weight.
Key sectors represented within the ETF include consumer discretionary (standing at 16% of its holdings), followed by industrials at 11%, and communication services with 10%.
Balancing Performance and Cost
The American Century ETF has been active since 2018, which means it hasn't had a long track record. However, it has consistently outperformed the S&P 500 without heavily relying on select tech stocks. This impressive performance speaks volumes about the fund's curated collection of growth stocks.
This fund has an expense ratio of 0.29%, which is a bit higher than other ETFs. Nonetheless, given its more balanced growth option, the fee seems justified.
Can QGRO Continue its Success?
While QGRO has performed well, its potential to remain a market-beating ETF in the future relies on its diversification. Its balanced mix of growth stocks positions investors to capitalize on the market's long-term gains without worrying about a few underperforming stocks threatening its performance.
For investors looking to avoid funds heavily dependent on tech giants like Nvidia, Microsoft, and Apple, this ETF makes for an excellent addition to their portfolio, providing them with a long-term investment option.
Investors looking to diversify their portfolio beyond tech giants can consider the American Century U.S. Quality Growth ETF, as its top three holdings, Netflix, Booking Holdings, and TJX Companies, collectively make up less than 4% of its total weight, reducing the risk of one or a few poor-performing stocks impacting the fund significantly.
With a focus on growth stocks and a balanced mix of sectors, the American Century ETF has outperformed the S&P 500 without heavily relying on tech stocks, making it an appealing option for investors seeking a more diversified growth investment.
