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For most U.S. fund managers, beating the market this year has come down to one decision: whether or not to own shares of Inc.

More than 70 per cent of the actively-managed U.S. large-cap funds that are beating the 3.5-per-cent gain in the benchmark S&P 500 own shares of the Seattle-based e-commerce giant, according to Lipper data. Shares of the company are up nearly 45 per cent for the year-to-date, and account for nearly 40 per cent of the S&P 500’s gain for the year, according to S&P Global.

Those gains have left even investors like Warren Buffett, who has never invested in Amazon, kicking themselves for missing out on the company’s growth.

“I was too dumb to realize what was going to happen,” Buffett said at Berkshire Hathaway Inc’s annual shareholder meeting in early May.

Amazon has benefited this year from continued growth of e-commerce and is a business that seems largely immune from the threat of a global trade wars.

Yet with volatility in the stock market expected to continue through the U.S. midterm elections in the fall, Amazon’s pricy valuation and high level of fund ownership may leave the stock more vulnerable to a steep decline, analysts warn.

As a result, some outperforming fund managers who have so far avoided Amazon are branching out into companies ranging from Asian e-commerce company Alibaba Group Holdings Ltd to medical device maker Abiomed Inc, all in an effort to find better values.

“Not owning Amazon has obviously hurt us this year, but we’ve been fortunate to own names that have made up the difference,” said Bob Doll, portfolio manager of the Nuveen Growth fund.

Doll has avoided Amazon because of its trailing price-to-earnings ratio of 267, a valuation more than ten times that of the broad S&P 500. Instead, he has benefited from positions in MasterCard Inc, Red Hat Inc, and Intuit Inc, all of which are up more than 30 percent for the year and trade at less than a third of Amazon’s valuation.

“These stocks aren’t exactly cheap, they’re cheap compared to a concept stock like Amazon where the valuation is so full,” he said.

Scott Goginsky, a portfolio manager at the Biondo Growth Fund, said that his fund has been increasing its position in Alibaba instead of owning Amazon because he sees it as a cheaper way to invest in the growth of e-commerce.

“Would we have liked to be in Amazon 5 years ago? Yes. But in last year maybe Alibaba is the way to play it, because you’re getting the same growth profile without the same multiple.”

Shares of Alibaba are up 21 per cent for the year and trade at a trailing price to earnings ratio of 54.3.

Fund manager concentration in Amazon may leave the company more vulnerable to sell off if the volatility in the broad market increases this fall ahead of the mid-term elections, said Todd Rosenbluth, director of mutual fund research at CFRA Research.

“We’re of the belief that there will be greater market volatility for the duration of 2018 and while in theory that gives active managers a chance to buy in on whatever they have missed out on, that volatility could hit the better performers first,” he said.

The outsized gain in Amazon relative to other stocks in the S&P 500 suggests that growth is hard to come by in the U.S. market and should benefit more concentrated portfolios, said Daniel Davidowitz, a portfolio manager of the $2.1-billion Polen Growth Fund.

Davidowitz, whose fund holds only 20 stocks, said he has avoided Amazon because of its high valuation and stretched balance sheet and has instead moved into stocks like Invisalign braces-maker Align Technology Inc and Adobe Systems Inc , both of which are up more than 40 percent year-to-date.

“The average U.S. company is not growing that much. Earnings may be up a lot but a big slug of that is from the benefits of the Trump tax cut,” he said. “The only way to outperform is to find companies that are creating their own theme.”

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