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.
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.