The MSCI ACWI Growth Index is down about 11% to start 2022, but it also presents an opportunity for investors to get growth exposure on the dip, making it a potent value play.
Inflation worries and geopolitical tensions are certainly making a formidable one-two punch combo for investors’ portfolios. However, sometimes it takes a mindset shift to recognize an opportunity.
Rather than see red in growth-oriented stocks, investors can also view them as a red tag sale. Of course, it’s easier said than done when major stock market indexes are fluctuating up and down wildly amid volatile trading sessions.
“Although moves lower in the generally more-volatile Nasdaq Composite can be scary at times, they’re also an excellent opportunity to do some shopping,” wrote the Motley Fool’s Sean Williams in an article published by Nasdaq. “Since all notable declines in the broad-market indexes are eventually wiped away by bull market rallies, a bear market is nothing more than a sale on high-quality companies for patient investors.”
However, it’s always better to see the forest from the trees. Despite the recent weakness, growth has been a strong performer within the past five years, as evidenced by the index’s 90% performance.
As such, while the value-like opportunity may be the optimal move right now in the short term, growth has been a stellar performer in the long run. Even during the height of the pandemic, growth rebounded in a strong way relative to the MSCI ACWI Value index.
Get Active on Growth
Investors who are still a bit hesitant to dive in given the current market uncertainty can always opt for active management. This approach essentially puts a growth stock portfolio in the hands of professionals in a convenient way via an exchange traded fund (ETF) like the T. Rowe Price Growth Stock ETF (TGRW).
TGRW invests in growth stocks with one or more of the following characteristics: strong cash flow and above-average earnings growth, the ability to sustain earnings momentum in economic downturns, occupation of a niche in the economy, and the ability to expand during times of slow economic growth. Additionally, TGRW is able to deliver this actively managed strategy with an expense ratio of only 0.52%.
For more news, information, and strategy, visit the Active ETF Channel.