As advisors and investors well know, last year was a trying time for disruptive growth stocks and the related exchange traded funds, but with the calendar turned to 2022, optimism abounds that this beloved style of investing will regain its form.
If that prediction proves accurate, an assortment of ETFs, including the Goldman Sachs Future Tech Leaders Equity ETF (GTEK), stand to benefit. Fresh off its September 2021 debut, GTEK is one of the newest additions to the disruptive growth ETF fray, but its rookie status doesn’t belie its relevance.
In fact, GTEK is a relevant consideration for investors in 2022 because of the fund’s ability to address some of the most compelling innovative themes.
“We have conviction that understanding these themes will enable investors and companies to better take advantage of opportunities as they present themselves,” writes RBC in a recent note to clients.
One of the primary issues confounding disruptive growth strategies last year is the fact that market participants focus on the here and now and they want instant gratification. However, investing for disruptive growth requires patience and the ability to see that some of these concepts need time — often years — to come to prominence and deliver for investors.
“While valuations are theoretically the present value of all future cash flows, the vast majority of discussion tends to focus on the next quarter (optimistically, one to two years), and rarely is the time and effort taken to think 5, 10, or even 15 years into the future,” according to RBC.
The research firm highlights artificial intelligence, big data, climate change, innovative healthcare, and the metaverse as the five themes with significant long-term disruptive potential. By way of a nearly 78% allocation to the technology sector, GTEK offers leverage to those themes.
Adding to the GTEK case is the fact that the Goldman Sachs fund is actively managed, meaning that it can be responsive to changing environments across the innovative growth landscape and tap into new opportunities more rapidly than rival index-based funds.
GTEK holds 65 stocks, providing investors with a high conviction lineup of innovative growth bets. While that roster size is small, single stock risk isn’t prominent in the new ETF, as none of its member firms exceed weights of 3%. Investors are evidently embracing GTEK, as it already has $281.22 million in assets under management.
For more news, information, and strategy, visit the Future ETFs Channel.
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.