Growth stocks roaring start to the year has been one of the key narratives year to date. It shows in returns for the blue chip ETF FBCG. The Fidelity Blue Chip Growth ETF (FBCG) has returned 46.8% YTD and 8.6% over the last three months, per VettaFi. The strategy has benefitted from that strong year so far for growth stocks. But what will that approach look like going forward? Will markets manage a soft landing that could benefit a fund like FBCG?
Entering the year, the market narrative honed in on fears that rising rates and a looming recession would take its toll. By the time the first earnings season arrived, however, firms proved their resilience. Year to date, the S&P 500 has grown 16.6%, though driven heavily by just a few names. Still, that’s bucked the consensus entering 2023, helping a blue chip ETF like FBCG deliver its returns.
See more: “Some Growth Sectors Doing Their Earnings Season Jobs”
FBCG actively invests in large cap U.S. stocks with sustainable business models and potential for future earnings growth. The strategy, which recently hit its three-year milestone in June, looks for stocks believed to be mispriced by the overall market. That approach has helped its AUM grow nearly $300 million via flows and price influence over the last three months ending in September per VettaFi, charging just 59 basis points (bps).
What, then, is the outlook for a strategy like FBCG for the rest of the year and into 2024? A few factors here and there deserve a closer look. For one thing, at least per Fidelity’s mid-year stock market outlook, earnings estimates could return to a 10% growth rate by next year. This earnings season coming to an end now hasn’t slowed down the year’s growth momentum, either. Meanwhile, an end to the rate cycle may see the dollar cool off and boost overseas profits.
Perhaps most importantly, however, the Fed looks closer and closer to pulling off a “soft landing.” The Fed’s read of inflation data back and forth has significant implications for the overall economy. If the data satisfies the Fed, the rate hike cycle may be complete. That could mean an end to further hikes and a boost to an already robust economic picture. At least one Fed governor has shared that he does see the economy “on the flight path” to a soft landing.
FBCG could be a strategy to watch in such a scenario. The strategy remains in buy territory per its September 6th technical chart on YCharts and Simple Moving Averages (SMAs) too, with its price above both SMAs as of September 6th. Its 50-day SMA sat well above its 200-day SMA as of early September. As such, FBCG could be positioned for a solid end to 2023 and may be worth considering for the growth-minded investor.
Fidelity Investments® is an independent company, unaffiliated with VettaFi. There is no form of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the information herein. Fidelity Investments has not been involved with the preparation of the content supplied by VettaFi and does not guarantee, or assume any responsibility for, its content.
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