VettaFi’s vice chairman Tom Lydon discussed the SPDR Portfolio S&P 500 Growth ETF (SPYG) on this week’s “ETF of the Week” podcast with Chuck Jaffe of “Money Life.”
Lydon opened by discussing the changes in outlooks between last year and this year for advisors and investors, with many selling out of growth this time last year as concerns about inflation and rising interest rates began to come to the forefront.
Growth has been particularly challenged this year, with many of the largest growth tech stocks dropping more than the S&P 500 in 2022.
“Three months ago, June 16, put in a low in the market that since that point we’ve seen a 17% advance in the S&P 500. This ETF, SPYG, is really the S&P 500 — a little bit more on the growthy side,” Lydon explained. “Also, it’s only charging four basis points.”
The S&P 500 and SPYG are both close to moving above their 200-day moving averages, a good technical indicator to buy when it comes to individual funds, and both SPYG and the S&P 500 are above their 50-day moving averages. Because these growth giants such as Apple, Microsoft, Amazon, and others are in virtually every core equity portfolio, the moving average could in this case be used as an indicator to tilt more towards growth stocks once more.
“A lot of money has been shifting in the last 12 months, Chuck. On the fixed income side, people moved away from the Barclay’s Bloomberg Agg, and they moved into areas like alternative income or short duration,” Lydon said. “On the equity side, they moved away from the mega-caps, the large-cap growth; they moved into quality, they moved into value, they moved into dividend strategies.”
Lydon explained that buying into a strategy when feeling somewhat uncertain can oftentimes lead to a positive outcome and prevent an advisor or investor from missing out on a run of performance, particularly in a time of declines like what has been seen recently.
“From a fundamental standpoint, things are looking good. You’re seeing rising rates, which should fight off inflation,” Lydon said, while acknowledging the risk of recession. “Most importantly, long-term, if you want to have growth in your portfolio and diversification, you can’t beat the S&P 500.”
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