The downward pressure on the S&P 500 is giving growth investors more headaches than purveyors of value. That said, if a market recovery can happen soon, investors may want to get a head start on growth.
Given that the S&P 500 index had its worst first half in over 50 years, things can get better before they get any worse. At least, that’s what should fundamentally happen, but with recession fears looming, recovery could be prolonged as the second half of 2022 is underway.
“We had the unprecedented pandemic that shut the world down and the unprecedented response, both fiscal and monetary,” Stephanie Lang, chief investment officer at Homrich Berg, told CNBC. “It created the perfect storm with regard to surging demand and supply chain disruptions, and now there’s inflation that we haven’t seen in decades and a Fed that was caught off guard.”
“Now the market is forced to adjust to this new reality where the Fed is trying to play catch up and slow growth,” Lang added.
A Dynamic Option for Growth
The good news is that the recent market downturn could mean a recession was already priced into stocks. History is on the the market’s side when it comes to a second-half bounceback.
“The markets are going to price in the recession before the recession actually happens and that’s what you need to focus on as an investor,” said Courtney Garcia, senior wealth advisor at Payne Capital Management, to CNBC. “When you have a period like now where the markets are down more than 15% in the first half of the year, which has happened a couple times in history, they tend to have a really good second half of the year by an average of about 24%.”
This could be an ideal opportunity to get growth exposure via an active, dynamic option. One exchange traded fund (ETF) to look at is the American Century Focused Dynamic Growth ETF (FDG).
The fund seeks long-term capital growth through investments in a focused number of large- and mid-capitalization U.S. growth stocks. FDG uses a high-conviction strategy designed to invest in early stage, rapid growth companies with a competitive advantage, high profitability, growth, and scalability to sustain their leading positions.
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