FRTY: A Focused Mid Cap Growth ETF Throwing Caution To The Wind

2025-05-22 23:30:50 ET

Summary

• FRTY is a focused mid-cap growth ETF comprised of 40 U.S. stocks undergoing "Positive Dynamic Change". Its ER is 0.60% after waivers and the ETF has $85 million in AUM.
• FRTY's current holdings are increasing sales at a faster rate than they were three and five years ago, making the fund a standout among nearly all U.S. Equity ETFs.
• However, Alger's strategy appears reckless. I calculated a 1.60 five-year portfolio beta, a 36.56x forward P/E ratio, and a weighted average ROE that's substantially lower than its peers.
• Despite strong current momentum features, Alger clearly didn't hold these stocks before their big run-ups. Notably, it's been the worst-performing fund in its category since its launch four years ago.
• There are too many red flags to justify buying FRTY, so I'm confidently rating it a "sell" and recommend readers to look into the four other mid-cap growth ETFs highlighted in this article.

Investment Thesis

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