Wall Street saw gains during a shortened holiday trading session, with exchange-traded funds climbing alongside broader equity markets. Amidst this upward momentum, the State Farm Growth Fund exemplifies the robust performance currently seen in capital appreciation strategies. Trading at $133.36, the fund has posted a year-to-date return of over 20% and boasts a massive 95.64% return over a five-year period. With net assets topping $9.1 billion, the fund maintains a lean expense ratio of 0.12% while adhering to a mandate that invests at least 80% of assets in equity securities anticipated to appreciate over the long term.
German Investors Pivot to US Equities
The appetite for American growth assets isn’t limited to domestic investors. A recent study by the BVI highlights a significant shift among German investors, who are increasingly using ETFs to concentrate their holdings in the US market. The data reveals that nearly half of all equity ETFs held by German investors are allocated to US strategies. In contrast, when looking at the broader landscape of investment products launched in Germany, US exposure sits at a more modest 39% as of mid-2025. This discrepancy suggests a deliberate preference for passive vehicles when accessing the American corporate sector.
Structural Drivers of Allocation
This heavy weighting toward US stocks in ETF portfolios is largely a byproduct of how indices are constructed. Because many ETFs track market-capitalization-weighted indices, capital naturally flows toward the most valuable listed corporations—which currently happen to be predominantly American. Consequently, European equities play a smaller role in these passive portfolios, accounting for only about one-third of ETF investments. This is significantly lower than the 52% European allocation seen across the wider spectrum of investment products favored by German investors.
Emerging Markets and Factor Similarities
Beyond the US and Europe, ETFs have firmly established themselves as the vehicle of choice for accessing the “Rest of the World.” The analysis shows that ETFs manage a staggering 75% of the assets in emerging market equity funds held by German investors. However, those expecting a stark difference in risk profiles between active funds and ETFs might be surprised. Despite the higher US exposure in ETFs, the fundamental factors—Growth, Quality, and Yield—differ little between the two investment types. While ETF portfolios may appear “growth-heavy” due to current market valuations, this trend is mirrored in active funds as well.
Nuances in Portfolio Composition
While the broad factor profiles are similar, distinct structural differences remain between active and passive management styles. ETF portfolios generally contain more liquid assets, exhibit higher momentum exposure, and maintain a stricter focus on large-cap companies. Conversely, active fund managers are distinguishing themselves by leaning into smaller titles and stocks with lower volatility. This suggests that while the “growth” narrative is consistent across the board, active management still offers a pathway to defensive positioning that purely index-based strategies may overlook.
