While markets have experienced a sudden bout of equity volatility, investors should still maintain a positive outlook on the overall stock market and related ETFs to capture the ongoing long-term growth potential.
The “equity sell-off has been triggered by fears of higher inflation and higher interest rates that have been exacerbated by investor complacency,” Jeff Schulze, Investment Strategist for ClearBridge Investments, said in a note. “We believe the selling is overdone and that the market can handle higher rates if the ascent is not too rapid. Long-term volatility measures suggest investors are willing to look past short-term price swings and focus on solid economic growth as a driver of equity performance.”
Schulze pointed out that corrections and market pullbacks are a normal occurrence in a healthy equity environment. Investors shouldn’t think that this is a one-off event and should become familiarized with such events, which are typically followed by a period of heightened volatility as fear begins to seep into traders’ mindset.
2018 ETF Trends Virtual Summit returns Wednesday, March 14! Earn 5 CE Credit – click to register!
While short-term volatility has spiked, long-term volatility remains muted, reflecting a stable outlook over longer periods, especially as more focus on stronger economic growth in the U.S. and abroad.
Nevertheless, as the U.S. equity bull market grows long in the tooth, investors can consider an actively managed ETF to bank on a seasoned investment team’s ability to sift through various stocks and pick out companies with solid fundamentals that may continue to push ahead.
For example, Legg Mason partnered with ClearBridge Investments to provide the ClearBridge All Cap Growth ETF (NasdaqGM: CACG), which is managed by the ClearBridge team, including Peter Bourbeau, Margaret Vitrano, Richard Freeman, and Evan Bauman.
Financial advisors can also learn more about Legg Mason’s insights at the upcoming virtual conference. On March 14, 2018, ETF Trends will be hosting its annual Virtual Summit, an online virtual conference environment where financial advisors can learn about current ETF issues, hear from industry experts and connect with peers without the burden of cost and traveling.
CACG tries to achieve long-term capital appreciation by investing in a diversified portfolio of large, medium and small capitalization stocks that have the potential for above-average long-term earnings and cash flow growth. The team will also look through companies with a range of growth opportunities while evaluating the company’s business model, financial structure and management acumen.
2018 ETF Trends Virtual Summit returns Wednesday, March 14! Earn 5 CE Credit – click to register!
ClearBridge includes different selection criteria for the separate asset categories. For instance, large company growth stocks will include those that exhibit superior balance sheets, exceptional management teams and long-term, consistent operating histories. Small- and mid-sized company growth stocks are screened for rapid earnings growth potential, unrecognized values, industry leadership and management teams that have a significant ownership stake.
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