Value equities impressed earlier this year, and while they may resume that trend at some point, it’s clear that growth stocks, namely technology fare, are cobbling together some momentum.
That should benefit exchange traded funds like the Goldman Sachs Innovate Equity ETF (GINN). As its name implies, GINN focuses on disruptive companies – a segment of the market poised to benefit from declining interest rates and deflation, though the latter scenario may be further out.
GINN, which tracks the Solactive Innovative Global Equity Index, is a multi-theme ETF, providing exposure to to the following trends, according to Goldman Sachs: Data-Driven World, Finance Reimagined, Human Evolution, a Manufacturing Revolution, and the New Age Consumer.
However, technology intersects with those names and many more. As such, that sector accounts for 35% of GINN’s weight, making the ETF a compelling non-dedicated way for investors to tap into tech and benefit from a growth equity resurgence. Data confirm that resurgence is already underway.
“What we’ve seen since the beginning of June is that tech stocks are back on top. Technology is the highest-performing sector in the U.S. market, up 12.4% since June 1, 2021. Energy, which formerly led the market with growth near 40% as of May this year, has tanked. The sector is down 5% since June,” writes Morningstar analyst Lauren Solberg.
As Solberg notes, some familiar names are leading the market again this year.
“For the year to date, the top five contributors to the U.S. equity market are all technology companies and heavy-hitter names from the FAANG (Facebook, Amazon.com, Apple, Netflix, Google) group,” she says.
Google parent Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Facebook (NASDAQ: FB), and Amazon (NASDAQ: AMZN) are all top 10 holdings in GINN, combining for 8.5% of the ETF’s roster.
Of note to investors is that GINN isn’t solely reliant on tech. In fact, it offers up plenty of growth via the healthcare sector due to a curated approach to that normally defensive group. GINN taps into genomics and other fast-growing corners of healthcare. The sector accounts for 19.4% of the fund’s roster, which is well above its representation in broad market benchmarks.
Beyond sector exposure, GINN does an effective job of mitigating single-stock risk. The fund has 460 components, none of which sport weights in excess of 2.6%. Its top 10 holdings combine for just 18.6% of the fund’s weight.
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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.