Concentrated ETF Bests S&P 500 With Active Stock Picks

Core Insights - The Alger Concentrated Equity ETF (CNEQ) achieved a return of over 32% in 2025, outperforming the S&P 500 by more than 14 percentage points, benefiting from a focused portfolio that adapted to a changing market environment [1][2]. Investment Strategy - CNEQ employs a concentrated investment strategy, holding 30 or fewer large-cap companies identified through fundamental research as having strong growth potential, reflecting Alger's philosophy of investing in firms undergoing "Positive Dynamic Change" [3][4]. - The fund's concentrated approach allows for greater weight on individual positions compared to broader market indexes, which can enhance returns if the portfolio manager successfully identifies companies with strong earnings momentum [4]. Portfolio Composition - The top holdings of CNEQ include major players in artificial intelligence infrastructure such as NVIDIA Corp. (14.09%), Microsoft Corp. (9.63%), Amazon.com Inc. (7.62%), and Meta Platforms Inc. (3.69%) [5][10]. - In addition to large tech companies, the fund also invests in Nebius Group, a specialized GPU-cloud provider, and includes holdings in Taiwan Semiconductor Manufacturing Co., Broadcom Inc., and Apple Inc. [6][10]. Market Trends - Alger's research indicates that the transition to "agentic AI," which involves autonomous systems capable of independent reasoning and action, is expected to significantly increase demand for compute capacity, potentially exceeding current levels by 10 to 100 times [7].