In the ongoing battle between growth and value, it’s been the former that has been winning out thus far during the Covid-19 pandemic. As such, exchange-traded fund (ETF) investors can capitalize on growth themes using funds that provide exposure to these opportunities.
“For some time, growth companies have been outperforming their value counterparts – and the trend has been exacerbated by the coronavirus pandemic,” wrote Katie Trowsdale in a FTAdviser article. “To date, the pattern has been in place for 13 years, costing US value investors a whopping 185 per cent versus their growth equivalents. In early 2020, with the worldwide spread of Covid-19, the trend has accelerated further.”
Of course, if growth is winning, then it must mean somebody is losing. In this case, it continues to be value.
“Many value investors have been left scratching their heads, others are running for the door and some value fund managers are admitting defeat,” the article added.
Investors looking to capitalize on the latest growth themes could give funds like the Global X Thematic Growth ETF (GXTG) a look. The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Thematic Growth Index.
The fund invests at least 80% of its total assets in the securities of the underlying index. The underlying index seeks to provide broad exposure to thematic growth strategies using a portfolio of ETFs.
GXTG offers investors:
- A multi-theme solution: In a single trade, GXTG delivers access to multiple disruptive macro-trends arising from technological advancements, changing demographics and consumer preferences, or evolving needs for infrastructure and other finite resources.
- High growth potential: GXTG invests in a basket of individual thematic ETFs that exhibit high long-term growth potential.
- A core building block: GXTG is designed to be a core building block for growth-oriented portfolios, offering broad thematic exposure at a 0.50% total expense ratio.
The current market environment is ripe for growth, according to the FTAdviser article. It cited three factors that could portend to more growth opportunities for ETF investors in the coming months.
“First, the more scarce growth has become, the more investors have been prepared to pay for it. Second, the falling interest rate environment has resulted in investors’ willingness to pay up for long-term growth,” the article stated. “Third, monetary stimulus has boosted asset prices to inflated levels – so much so that investors no longer care about valuation.”
For more market trends, visit ETF Trends.