Fidelity's Quant-Enhanced Growth ETF Carries Higher Volatility Than Passive Indexing

Investors in the Fidelity Enhanced Large Cap Growth ETF (FELG) have seen a year-to-date decline of approximately 9%, a steeper drop than the iShares Russell 1000 ETF, which fell roughly 3% over the same period. This volatility is driven by a portfolio concentrated in the information technology sector, which represents 50% of the portfolio. The top three holdings—NVIDIA, Apple, and Microsoft—combine for roughly 34% of the fund.

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investing

The Case for VOO and Chill: Why Most Investors Should Skip Stock Picking

For most investors, buying a broad-market ETF like the Vanguard S&P 500 ETF (VOO) is a more reliable strategy than picking individual stocks. In 2025, VOO returned 17.8%—a benchmark that eluded 79% of U.S. large-cap active managers. That underperformance isn’t an anomaly. Last year was the fourth-worst on record for active managers trailing the S&P 500 since S&P Dow Jones Indices began tracking the data in 2002. Even professionals, armed with resources far beyond the reach of retail investors, fail to beat the market with consistency. Warren Buffett, arguably the greatest investor of all time, has long argued that ordinary investors can outperform the pros by embracing low-cost index funds and adding to their holdings steadily over time. He’s called them the most sensible equity investment for the vast majority of people. The data behind VOO’s performance versus active management isn’t just compelling—it’s conclusive.

FELG uses a quantitative multifactor model to tilt toward companies with stronger fundamentals and more reasonable valuations than the Russell 1000 Growth Index, its benchmark. While the quantitative screen attempts to manage valuation risk, it cannot neutralize the structural rate sensitivity of growth stocks. When the 10-year Treasury yield rises—currently near 4.35%—the present value of future earnings is compressed. This concentration amplifies drawdowns during tech-driven selloffs.

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portfolio concentration

Sixty Percent of Berkshire Hathaway’s $320 Billion Stock Portfolio Rests on Nine Companies

Sixty percent of Berkshire Hathaway’s $320 billion stock portfolio is now concentrated in just nine companies, a strategic shift under Greg Abel that signals a move toward durable, core positions over broad diversification. While Warren Buffett built the portfolio with deep conviction in select businesses, Abel’s first shareholder letter formalizes that focus—elevating nine holdings as the anchors of Berkshire’s equity strategy. Apple alone makes up 18.5% of the portfolio, a position Buffett began scaling back in 2023 but which Abel now appears ready to maintain or even expand. “I’m very happy to have it be our largest holding,” Buffett said in a recent interview, suggesting the selling phase may be over. At 31 times forward earnings, Apple trades near fair value, supported by strong iPhone sales in China and an upcoming AI-driven Siri upgrade expected to spur a major refresh cycle. American Express, at 15% of the portfolio, has evolved from a charge-card issuer into a growing lender, with net interest income accounting for a quarter of revenue and card fees rising 17% annually since 2019. Trading at 18 times earnings, it offers attractive valuation relative to its mid-teens EPS growth targets. Coca-Cola, a decades-long holding at 9.8% of the portfolio, leverages unmatched brand power to maintain margins while peers struggle, delivering 7% to 9% annual EPS growth at a forward P/E of 24. Moody’s, at 3.4%, benefits from a global duopoly in credit ratings and a fast-expanding analytics segment, though its 27 times earnings valuation reflects fair, not cheap, pricing. The final 13.4% is split across five Japanese trading houses—Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo—each held at between 9.7% and 10.8%. These firms mirror Berkshire’s own structure, operating diverse businesses and reinvesting cash flows. Their shares have surged, with Marubeni up 173% over the past year, though valuations have diverged: Itochu and Sumitomo now trade at the lowest enterprise value-to-EBITDA multiples in the group, making them the most compelling entry points for new investors. Itochu’s focus on high-return capital investments, including full ownership of FamilyMart, sets it apart from peers more tied to volatile resource markets. Itochu and Sumitomo trade at lower enterprise value-to-EBITDA ratios than their peers, making them the two best options for investors interested in the Japanese trading houses.

Related Brief9h ago

investing

The Case for VOO and Chill: Why Most Investors Should Skip Stock Picking

Related Brief1d ago

portfolio concentration

Sixty Percent of Berkshire Hathaway’s $320 Billion Stock Portfolio Rests on Nine Companies

Fidelity's Quant-Enhanced Growth ETF Carries Higher Volatility Than Passive Indexing

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Fidelity's Quant-Enhanced Growth ETF Carries Higher Volatility Than Passive Indexing

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Larger tax refunds and AI spending are offsetting market volatility, but the real test comes when oil prices stay above $100

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Read More Analysis

Larger tax refunds and AI spending are offsetting market volatility, but the real test comes when oil prices stay above $100

FDIC Rules Out Pass-Through Insurance for Stablecoin Holders

The Ledger Morning

Read More Analysis

Larger tax refunds and AI spending are offsetting market volatility, but the real test comes when oil prices stay above $100

FDIC Rules Out Pass-Through Insurance for Stablecoin Holders