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A Small Cap ETF for Growth Investors

Baystreet.ca
·1 min read

Many top stocks today are trading at obscene valuations and are running out of room to rise in value. As bullish as you may be on a stock like Amazon (NASDAQ:AMZN), at a $1.6-trillion valuation, the odds of it doubling in value anytime soon is pretty remote. That’s why investing in small cap stocks may be a better route to take right now.

They aren’t low-risk penny stocks but they’re still small enough that they can potentially double or triple in value. The First Trust Small Cap Growth AlphaDEX Fund (NASDAQ:FYC) could be a great option for growth investors as it holds a good mix of growth stocks that aren’t terribly expensive and that are from a variety of different sectors.

Its top holding is solar energy company Vivint Solar Inc (NYSE:VSLR), which has soared nearly 500% this year. Healthcare company iRhythm Technologies (NASDAQ:IRTC) is the second largest holding in the fund, and it’s also having a banner year, rising over 220% in value thus far.

The fund itself is up a much more modest 9%, slightly outperforming the S&P 500’s 7% returns. However, that’s also because the fund is so diversified – its top holding is just 2.45% of its total assets. And its top 10 holdings only make up for 10.83% of all assets.

Read:

It’s even diversified among different sectors, with just over 24% of its holdings coming from tech, 21% from healthcare, and consumer cyclical being the third largest sector at 15%.

The ETF’s a good way option if you want something with more potential growth and upside than the S&P 500.