Alger Concentrated Equity ETF's Q2 2025 Performance and Strategic Positioning: Evaluating a Concentrated Equity Approach in Shifting Markets

The Alger Concentrated Equity ETF (CNEQ) has emerged as a standout performer in 2025, with its concentrated equity strategy generating robust returns amid a volatile market environment. As of September 16, 2025, the fund delivered a total return of 54.70% over the past 12 months and a year-to-date (YTD) total return of 32.85%AETF_SP Alger Concentrated Equity ETF^[2]. For Q2 2025 specifically, CNEQ posted a 13.33% return, outpacing broader benchmarks and underscoring the efficacy of its high-conviction approachAETF_SP Alger Concentrated Equity ETF^[2]. This performance reflects the fund's focus on large-cap growth stocks, particularly in technology and innovation-driven sectors, which have thrived in a landscape defined by AI adoption and macroeconomic uncertainty.

Strategic Positioning: Concentration as a Double-Edged Sword

CNEQ's strategy revolves around a tightly focused portfolio of no more than 30 holdings, emphasizing companies with “Positive Dynamic Change”—a framework prioritizing strong management, scalable business models, and multi-year growth potential in earnings per share (EPS) and free cash flowAETF_SP Alger Concentrated Equity ETF^[2]. As of Q2 2025, the fund's top positions included heavyweights like NVIDIA Corporation and Microsoft Corporation, with the technology sector accounting for 43.66% of assetsAETF_SP Alger Concentrated Equity ETF^[2]. This concentration amplifies returns in favorable conditions but introduces risks during sector-specific corrections. For instance, CNEQ experienced a maximum drawdown of 27.58% as of April 8, 2025AETF_SP Alger Concentrated Equity ETF^[2], a period marked by broader tech sector volatility and rising interest rate expectations.

The fund's active management style, evidenced by a 46.82% portfolio turnover rateAETF_SP Alger Concentrated Equity ETF^[2], allows it to pivot quickly to emerging opportunities. However, this approach demands precise execution, as underperforming holdings can disproportionately impact returns. CNEQ's non-diversified structure—allocating significant capital to a limited number of issuers—aligns with its mandate to capitalize on asymmetric risk-reward profiles, though it diverges from more diversified peers in the Large Growth categoryAETF_SP Alger Concentrated Equity ETF^[2].

Navigating Shifting Markets: Sector Allocation and Macroeconomic Tailwinds

CNEQ's Q2 2025 results benefited from its overweight positions in AI-enabling technologies and cloud infrastructure. NVIDIA's surge, driven by surging demand for AI chips, contributed meaningfully to the fund's performanceAETF_SP Alger Concentrated Equity ETF^[2]. Similarly, Microsoft's dominance in cloud computing and AI integration bolstered returns. The fund's exposure to the “America First” energy transition—though less pronounced than in Alger's Mid Cap Focus Fund—also provided diversification benefits as energy infrastructure gains tractionAETF_SP Alger Concentrated Equity ETF^[2].

However, the fund's reliance on growth-oriented sectors exposes it to macroeconomic headwinds. Rising interest rates and inflationary pressures in mid-2025 created headwinds for high-valuation stocks, testing the resilience of CNEQ's concentrated approach. Despite this, the fund's trailing twelve-month compound annual growth rate (CAGR) of 51.02%AETF_SP Alger Concentrated Equity ETF^[2] suggests that its strategy remains well-suited to environments where innovation outpaces macro risks.

Cost Efficiency and Manager Expertise

CNEQ's 0.55% expense ratio, supported by fee waivers through December 31, 2026AETF_SP Alger Concentrated Equity ETF^[2], enhances its appeal relative to actively managed peers. This cost structure, combined with the expertise of portfolio manager Dr. Ankur Crawford, positions the fund to compete in a crowded growth equity space. Crawford's mandate to prioritize “sector-agnostic” opportunitiesAETF_SP Alger Concentrated Equity ETF^[2] allows flexibility in capital allocation, a critical advantage in rapidly evolving markets.

Conclusion: A High-Volatility, High-Reward Proposition

The Alger Concentrated Equity ETF's Q2 2025 performance validates the potential of its concentrated equity strategy in capturing outsized returns from high-conviction ideas. However, investors must weigh these gains against the inherent risks of reduced diversification and sector concentration. In a shifting market environment characterized by AI-driven disruption and macroeconomic uncertainty, CNEQ's approach offers a compelling—but not without caveats—case for those seeking growth at the expense of volatility.