Why Fundamental Research Can Set Growth Investing Apart

It’s hard not to find a growth approach to investing appealing. Growth firms, especially in a kind economic environment, can give a portfolio the oomph it needs to meet client goals. Of course, not all economic conditions are kind, and growth firms, which often rely on debt, can be particularly vulnerable. That’s why fundamental research can play a key role in growth investing.

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Growth investing strategies don’t all operate the same way, of course. Growth investing ETFs that take a passive, indexed approach often pick an index and, with some changes each year, mostly stick to it.

Active growth strategies offer more flexibility, but not all active approaches are the same. An active growth ETF could, for example, take big swings on a very particular—and potentially very risky—set of names to follow a particular set of standards. An active growth ETF with a disruptive tech tag, for example, may have to avoid solid names for potentially overly risky companies.

That’s why a particularly fundamentals-focused approach can really boost a growth investing strategy. Deep, fundamental research from a large team of analysts can help a smaller team of active managers. Add in a broad growth remit without a specific area like tech, for example, and managers can find the best overall opportunities that stand out through the research.

The Natixis Loomis Sayles Focused Growth ETF (LSGR) presents such an option. The strategy invests in a tight, closely monitored group of names. While it does not have market cap limits, it tends to focus on large-cap growth stocks. It invests in various security vehicles, including ETFs, ETNS, REITS, and preferreds, in addition to common stocks.

LSGR charges 59 basis points for that active approach. According to Natixis Investment Managers data, the fund has returned 9.9% YTD. It may appeal to investors looking for a deeper approach to growth investing.

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