Growth ETFs Led the Rebound From Omicron-Induced Retreat

Growth stocks and related exchange traded funds led the rebound Monday after the precipitous plunge on COVID-19 Omicron fears at the end of the last week opened up an opportunity for bargain hunters to sift through cheap picks.

“People are looking at it as a little bit of a sale on Friday and an opportunity to get into some areas of the market that got hit hard,” Robert Pavlik, senior portfolio manager at Dakota Wealth Management, told Reuters.

Major Wall Street indexes had plunged between 2.0% and 3.5% on Friday after news of the Omicron variant fueled market uncertainty. Investors are now waiting on how President Joe Biden will tackle Omicron and the country’s response to a potentially more transmissible variant.

“Friday was a panic selloff,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told the Wall Street Journal. “Traders have had time to sit back and breathe a bit,” Ozkardeskaya added, pointing out that trading volumes were lower over the Thanksgiving holiday weekend, which could have exacerbated the pullback.

Additionally, some were even considering that the Federal Reserve might delay plans for hiking interest rates in the face of a potentially disruptive new coronavirus variant.

“If Omicron did become a major issue, it would have to be bigger than the Delta waves which we just went through. There’s no question that the (Fed) taper would either be paused or delayed,” Thomas Hayes, managing member, Great Hill Capital LLC, told Reuters.

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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