The disruptive growth label, a group often seen as the next generation of innovators, is struggling.
On the upside, past economic cycles confirm that investment factors themselves move in and out of style, meaning it’s likely that growth’s laggard status is temporary. Advisors can position for a disruptive resurgence with the WisdomTree Disruptive Growth Model Portfolio.
“The WisdomTree Disruptive Growth ETF Model Portfolio targets structural growth themes that are believed to drive innovation across different industries and segments of society in the future,” according to the issuer. “The themes and affiliated ETFs selected for inclusion will typically have above-market growth projections. The model portfolio seeks maximum long-term capital appreciation and may include both WisdomTree and non-WisdomTree ETFs.”
A Post-Pandemic Idea?
As has been widely noted over the course of the coronavirus pandemic, the health crises spurred major disruption in a variety of investable industries, including cloud computing, e-commerce, fintech, and more.
What enhances the allure of the WisdomTree model portfolio is that those shifts and trends won’t disappear when COVID-19 abates.
“We believe this has led to dramatic growth in certain ‘thematic’ megatrends, and we think these trends will be with us for years to come,” says Scott Welch, WisdomTree chief investment officer – model portfolios. “This prompted us to launch our disruptive growth model in August of last year. We identified six thematic sectors and ETFs and built a diversified portfolio accordingly. It is intended for growth-focused advisors and end clients who can tolerate highly valued companies and potentially higher volatility in exchange for potentially higher long-term growth rates.”
Over the near-term, the model portfolio could continue being negatively correlated to rising 10-year Treasury yields, but as that scenario reverses, the model portfolio’s diversification benefits, including scant individual equity overlap between its ETF components, should shine.
“With COVID-19 vaccinations accelerating and the global economy in what we believe is the early stages of a steady recovery, we anticipate that 2021 generally will be a constructive ‘risk-on’ market environment,” adds Welch. “We believe our disruptive growth investment theme will play out well in this environment, as will our corresponding Model Portfolio. It can be allocated to as a stand-alone equity model or as a complementary ‘sleeve allocation’ in broader portfolios where advisors are seeking to improve performance.”
For more on how to implement model portfolios, visit our Model Portfolio 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.