The stock market is thought of as forward-looking, and investors are often encouraged to look forward, not back. However, while history doesn’t always repeat in financial markets, it often rhymes.
That is to say that examining market history does have merits, and that’s particularly true with disruptive growth and thematic investing. For its part, the Goldman Sachs Future Tech Leaders Equity ETF (GTEK) doesn’t yet have extensive history. It turned a year old earlier this month, but the notion of history lessons as they pertain to disruptive growth investing is applicable with this exchange traded fund.
The actively managed GTEK, which has $218.18 million in assets under management as of September 22, is highly relevant in the disruptive growth investing conversation because, as an active fund, it can move swiftly to embrace emerging themes while providing investors with a broad portfolio of those themes.
“‘Industry 4.0’ – involving such advances as the smart factory, autonomous systems, the Internet of Things, artificial intelligence, 3D printing and machine learning – promises a greener future. A replenished biosphere, better energy and food security and an upsurge in productivity growth that can boost living standards and job opportunities around the globe are key components,” according to BNP Paribas research.
GTEK currently has exposure to some of those themes and has the flexibility to add more as the managers see fit. That flexibility is important because as history reminds investors, disruptive themes evolve and shift at rapid paces.
“By the early 2000s, the productivity potential of the infrastructure upon which the second industrial revolution was built had become exhausted. A new technological infrastructure emerged, driven by computers, IT networks and robotics. These were the seed stock of the latest leap forward, Industry 4.0,” added BNP Paribas.
In prior industrial revolutions, the creation of new infrastructure spurred increased productivity and profitability in some industries, and that history could repeat, potentially providing a runway for GTEK member firms to deliver upside for investors.
Additionally, investors that take the time to understand how GTEK components can positively affect other industries could be rewarded because business-to-business interaction usually serves as the foundation of credible industrial revolutions.
“What is required is a wider understanding of the breadth – and, crucially, the inter-relatedness – of the challenges and opportunities the world faces,” concluded BNP Paribas. “Taking a rigorous, holistic approach to see how the evolving infrastructure platform creates business opportunities and to identify the companies best placed to exploit them.”
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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.