The S&P 500 is down 4.29% over the past month, and the VIX has climbed to 27.29. Two large-cap growth ETFs have held their ground in ways worth understanding as the selloff continues to develop.
Fidelity Enhanced Large Cap Growth ETF (NASDAQ:FELG) is up 0.28% over the past month. Invesco QQQ Trust (NASDAQ:QQQ | QQQ Price Prediction) is up 0.07% over the same stretch. Against a broad market down more than 4%, both figures reflect a divergence in performance worth examining.
Two Funds, Two Different Approaches to the Same Bet
QQQ tracks the Nasdaq-100, giving investors passive exposure to the 100 largest non-financial companies on the Nasdaq. Its portfolio is dominated by AI infrastructure names — NVIDIA, Apple, and Microsoft are the top three positions — with information technology and communication services accounting for roughly 65% of holdings. That concentration is precisely why QQQ has held up while the broader market sold off: the companies driving AI capital spending have continued to attract institutional flows even as cyclical names retreated. At 0.18% expense ratio, investors get that targeted exposure cheaply.
FELG takes a different path to a similar destination. Rather than tracking an index mechanically, it uses a quantitative process to favor companies with improving fundamentals trading at reasonable valuations, benchmarked against the Russell 1000 Growth Index. The result is a portfolio that still leans heavily on mega-cap tech — NVIDIA, Apple, and Microsoft are the top three holdings — but with a more selective filter on quality and valuation than a passive index would apply. At 0.18% expense ratio and $4.7 billion in net assets, it offers a cost-efficient alternative for investors who want active tilts without active fees.
The Macro Factor: Where the Fed Goes, Growth Follows
The biggest external force acting on both funds over the next 12 months is the Federal Reserve’s rate path. Growth stocks are valued on future earnings, making their prices sensitive to the discount rate applied to those earnings. When rates fall, the math runs in their favor.
The current VIX has climbed to 27.29, reflecting genuine uncertainty about whether the Fed will cut in 2026 or stay on hold amid sticky inflation. Track the Fed’s dot plot and the monthly CPI report from the Bureau of Labor Statistics. When the Fed paused its hiking cycle in late 2023, long-duration growth ETFs staged sharp recoveries within weeks — a historical pattern that analysts have noted as relevant context for the current environment.
The Micro Factor to Watch in Each Fund
For QQQ, concentration in semiconductors is what matters most. NVIDIA alone is nearly 9% of the fund, and adding Broadcom, Micron, AMD, Applied Materials, and Lam Research makes semiconductors the single biggest driver of short-term performance. AI capital spending cycles move fast, and any shift in hyperscaler budgets or export restrictions on chips would move QQQ before the broader market reacted. Semiconductor earnings will be a key indicator of forward guidance on AI infrastructure spend.
For FELG, the key mechanic is its quantitative rebalancing process. Because the fund actively selects holdings based on improving fundamentals and reasonable valuations, its portfolio can shift meaningfully between rebalances. Health care at 9.2% and industrials at 7.8% give FELG more diversification than QQQ, and those weights can change as the model updates. Review Fidelity’s fund fact sheet after each quarterly rebalance to see whether the model is rotating toward or away from the tech-heavy names driving recent resilience.
What to Watch Over the Next 12 Months
If the Fed signals rate cuts before the end of 2026, historically, falling rates have correlated with gains in long-duration growth ETFs. Semiconductor earnings will be a key indicator of whether AI infrastructure demand is plateauing for QQQ. Quarterly rebalance disclosures will reveal whether FELG’s quantitative model is maintaining its tilt toward the high-quality growth names that have kept the fund above water during this selloff.
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