Capital Group Growth ETF

CGGR

Market cap $16.4B

CGGR outperforms peers due to active management, targeted growth stock exposure, and smart sector allocation, especially in communications and semiconductors. The fund's diversified portfolio and focus on fundamentally strong companies help limit downside risk and maximize upside in bull markets. CGGR trades at cheaper valuations than index-focused growth ETFs, with a strong quant rating and attractive share price.

One of the world's oldest and largest active asset managers is building more focused equity and fixed income ETFs in three of the market's most essential areas. Just today, the firm rolled out the Capital Group High Yield Bond ETF (CGHY), Capital Group U.S. Large Growth ETF (CGGG) and Capital Group U.S.

I highlight two ETFs — CGGR and TOGA — that have outperformed the S&P 500 in the past year, driven by strong fundamentals and global diversification. CGGR offers exposure to tech and non-U.S. equities, with a reasonable expense ratio and a track record of outperformance versus the S&P and SCHD. TOGA focuses on companies with strong fundamentals undergoing change, boasts significant international exposure, and has doubled the S&P's returns over the past year.

CGGR is a diversified ETF focusing on superior growth companies, with a 6.6% YTD decline presenting an attractive long-term accumulation opportunity. The ETF has a reasonable expense ratio of 0.39% and offers better price resilience during market declines compared to peers SCHG and MGK. CGGR's lower technology allocation may lead to underperformance if tech continues to grow rapidly, but it provides lower volatility and exposure to other sectors.

Despite the ETF industry's passive roots, active has stolen the show. Active ETF assets just topped the $1 trillion threshold, making up nearly 10% of the total ETF pie.

Three years after successfully launching its first ETFs, Capital Group has positioned itself for further growth. The firm announced today the rollout of eight ETF models portfolios.

An actively managed fund hitting its three year track record used to be a major milestone. A Morningstar rating would follow.

Capital Group Growth ETF (CGGR) is recommended with a buy rating due to its smart portfolio management strategy of focusing on high-growth, fundamentally sound stocks. CGGR's diversified portfolio and active portfolio management helps lower risk and capitalize on market growth trends. Top holdings like Meta, Tesla, and Netflix demonstrate robust growth rates, contributing to CGGR's strong share price performance.

Markets are coming off back-to-back gains of more than 20% each on an annual basis. That's historically rare, and the chances of a hat trick in 2025 are slim to none.

Investors are closing the books on another eventful year — marked by record highs for the major stock market indices, record action in Treasury yields and record assets and flows into ETFs. 2024 was also marked by a much-debated pivot from the Federal Reserve, a dramatic Republican sweep in Washington, and plenty of geopolitical turmoil.