Growth ETFs Gain Despite Rising Concerns Over the Recovery

Growth stocks and related exchange traded funds are holding up while the broader U.S. equity markets stumbled following the Labor Day weekend on concerns over a slowing growth outlook in face of rising Covid-19 infections.

The spike in Covid-19 cases over the summer caused many employers to postpone plans to return to the office, the Wall Street Journal reports.

The Labor Department’s recent employment report also underscored the ongoing troubles in the coronavirus pandemic as the pace of hiring in the U.S. slowed significantly over August.

“The Delta variant is starting to show up,” Brad McMillan, chief investment officer at Commonwealth Financial Network, told the WSJ. “The markets are kind of reassessing where growth is going to be and what that’s going to mean for earnings.”

Analysts are now waiting on the Federal Reserve, hoping the central bank could delay plans for scaling back its easy-money policies in face of rising hurdles to the slowing economic recovery.

“People are seeing the slowdown in the economy and the outlook becoming somewhat more opaque and therefore it is understandable that people wouldn’t want to jump in and put money to work,” Willem Sels, global chief investment officer at HSBC Private Bank, told the WSJ. “There are valid concerns about Delta, about Chinese and global growth and inflation, and it is natural that people want more visibility.”

Investors interested in the growth style can turn to targeted strategies like the American Century Focused Dynamic Growth ETF (FDG). FDG is a high-conviction strategy that invests in early-stage, rapid-growth companies with a competitive advantage and high profitability, growth, and scalability.

Additionally, investors can look to the American Century STOXX U.S. Quality Growth ETF (NYSEArca: QGRO). QGRO’s stock selection process is broken down into high-growth stocks based on sales, earnings, cash flow, and operating income, along with stable-growth stocks based on growth, profitability, and valuation metrics.

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