FPX: A High-Beta Growth ETF for Tech Investing

The First Trust US Equity Opportunities ETF (FPX) offers exposure to the 100 largest, most liquid, and best-performing US companies that have recently gone public. The fund tracks the Nasdaq US Equity Opportunities Index, which focuses on high-beta growth tech stocks. With a high beta of 1.51, FPX is designed to provide investors with significant growth potential, but also carries a higher level of risk.

The First Trust US Equity Opportunities ETF (FPX) is an exchange-traded fund (ETF) that provides investors with exposure to the 100 largest, most liquid, and best-performing US companies that have recently gone public. Launched on April 12, 2006, FPX tracks the Nasdaq US Equity Opportunities Index, which focuses on high-beta growth tech stocks. With a high beta of 1.51, FPX is designed to provide investors with significant growth potential, but also carries a higher level of risk.

FPX charges a moderate expense ratio of 61 basis points (bps) and has $1.16 billion in net assets. The ETF can be considered a high-beta growth portfolio and may be used as a risk-on investment strategy. Though FPX pays out a modest distribution rate of $0.74 per share, it yields a mere 0.44%, making it more suitable for growth rather than income.

The ETF's strategy is indexed to the IPOX US Composite Index, a market cap-weighted index that tracks the performance of newly publicly listed companies. The Index may include companies that became public entities through IPOs and spin-offs within the last four years. The Index caps constituent weight at 10% to improve diversification, given that companies may range in size from small- to large-cap. The Index is rebalanced quarterly.

The strategy largely favors large-cap companies but balances out diversification through the cap on constituent weights. Company sizes range from $772 million to $321 billion with a median market cap of $9.41 billion. The strategy is heavily weighted to the information technology sector, accounting for 33.72% of the total portfolio weight. FPX also heavily invests in industrials at 16%, communications at 10.57%, and financials at 9.73%.

FPX can be considered a highly concentrated portfolio strategy; the top 10 holdings account for 46.62% of the total portfolio weight. In contrast, the bottom 10 holdings account for only 0.70% of the total portfolio weight. Top holdings include GE Vernova (GEV) at 9.25%, AppLovin (APP) at 9%, Palantir (PLTR) at 5.43%, and Constellation Energy Corp. (CEG) at 4.60%.

Despite information technology being the largest sector weight, the strategy provides significant exposure to companies outside of the technology sector, providing for an appealing diversification strategy. FPX has performed exceptionally well in the last year as investors rotate into a risk-on, high-beta approach to risk management. This has led to significant growth in the ETF above the S&P 500.

However, investors should be aware that FPX exhibits significantly greater risk relative to the broader large-cap index. High-growth, high-beta companies may exhibit significantly greater volatility, particularly during periods of market stress, as seen in early 2025.

Looking at 1-year performance across the top holdings, FPX may have been largely driven by the exceptionally strong performance amongst these constituents, amongst other high-performance constituents like Seagate (STX) and CoreWeave (CRWV).

Despite the strong performance over the last year, I believe FPX may realize continued strength going forward as the Federal Reserve eases interest rates, potentially pushing investors into a more risk-on approach. Though I suspect there may be more growth to come, I believe investors should remain cautious given the challenging macroeconomic landscape. If investing in FPX, I recommend applying some measures of risk management in order to protect one’s holdings from drastic volatility. This may include a trailing stop on one’s holdings, allowing for the fund to grow while salvaging a predetermined amount of returns. The percentage of rollback will be determined by the investor’s risk profile; given the inherent volatility in FPX, I recommend a 20-30% trailing stop to ensure that shares are not sold prematurely.

FPX is a high-beta, passive investment strategy designed to provide investors with exposure to newly public companies, presenting certain risks that must be considered prior to making a final investment decision. New public companies may be considered riskier investments; analyzing the components of the portfolio, FPX has a relatively balanced investment strategy across newer and durable companies. FPX may exhibit higher volatility relative to the broader market index, making the strategy most appropriate for investors with a higher risk appetite. FPX can be considered as a highly concentrated portfolio strategy with a substantial proportion of the weight being spread across the top 10 holdings.