Technology and disruptive growth are investing concepts that market participants aren’t particularly fond of at the moment. However, they should be cautious about throwing babies out with the bathwater.
Consider the Goldman Sachs Innovate Equity ETF (GINN). As an exchange traded fund dedicated to innovative companies, GINN’s 468 components are primarily growth stocks. Owing to the Federal Reserve’s increasingly aggressive push to damp inflation, growth equities are out of favor today.
However, that’s a near-term view, albeit an accurate one. Looking further out, the case for an ETF such as GINN remains compelling due in large part to emerging technologies, including the metaverse and the ongoing expansion of e-commerce.
GINN isn’t a dedicated metaverse ETF, but it has leverage to that concept. Over time, that could be a plus for long-term investors because the metaverse investment is still in its formative stages.
“There are many ways to describe the Metaverse. We believe the Metaverse is an evolution of the Internet. It describes an environment in which there are persistent, shared 3D spaces linked by a virtual universe. Some describe it as the next evolution in digital connectivity where the value we place on our digital lives begins to outpace the value of our physical lives,” said Goldman Sachs portfolio manager Sung Cho in a recent note.
GINN’s metaverse-relevant holdings include Meta Platforms (NASDAQ:META), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA), among others. All three of those names are top 10 holdings in the Goldman Sachs ETF.
Adding to the allure of GINN as a backdoor metaverse play is the sheer expanse of this investment concept. As Cho noted, the metaverse investing thesis includes chips, cloud computing, digital payments, gaming, and social media — concepts GINN has exposure to.
Turning to e-commerce, GINN provides investors with multiple avenues for capitalizing on a theme that’s still in its early stages, too.
“E-commerce companies are investing heavily in data-driven infrastructure optimization and digital and smart logistics solutions to improve the shopping experience and drive revenue expansion. Fulfillment and omnichannel strategy investments are taking center stage, and they are broadening outside of the retail giants we traditionally associate with these capabilities,” noted Goldman Sachs portfolio manager Brook Dane.
Amazon (NASDAQ:AMZN) is GINN’s second-largest holding, and the ETF’s overall consumer discretionary exposure is 15.5%. Add to that, GINN allocates about 29% of its roster to ex-U.S. stocks, indicating that it has some inroads to capitalizing on e-commerce expansion in developing economies.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.