An ETF Strategy to Capture a Return to Growth


Investors should consider an exchange traded fund strategy that can adapt to the ever-changing market environment.

In the recent webcast, An Advisor’s Guide to Discovering Transformational Companies, Kevin Lewis, vice president and senior client portfolio manager at American Century Investments, noted that growth as a characteristic has underperformed recently after years of outperformance.

However, Lewis argued that investors should be taking a long-term view of the markets without letting short-term trends deter them, especially since no one is capable of perfectly timing market moves. Consequently, Lewis advised investors to take on a constant allocation as the cost of missing out on the best days could be detrimental to a long-term investment portfolio.

To help investors access the long-term growth trends in the market, investors can turn to a targeted growth strategy like the American Century Focused Dynamic Growth ETF (FDG). FDG is a high-conviction strategy that invests in early-stage, rapid-growth companies with a competitive advantage and high profitability, growth, and scalability.

“Our exchange traded fund lineup expands your options to manage portfolio risk, reduce the impact of fees and taxes, and enhance return potential,” Sean Walker, vice president and ETF specialist at American Century Investments, said.

“Understanding that investors face many complex decisions as they pursue their financial goals, we’ve designed our ETFs to meet a variety of investor needs.”

Specifically, the strategy is an alpha-seeking portfolio based on manager research and insights. The American Century strategy also comes in an ETF wrapper, which provides the opportunity to add value in a lower-cost, tax-efficient vehicle.

“Not only do ETFs offer lower cost and liquidity, they also offer tax efficiency, which can aid a portfolio’s overall performance and allow investors to keep more of what they’ve earned invested. Keeping an eye on taxes year-round can help manage the tax bite at year-end​,” Walker added.

Lewis noted that it is important for investors to hone in on growth opportunities in the early phases. Specifically, according to American Century, the Focused Dynamic Growth ETF exhibits a growth score of 34.4% in a rapid growth phase of the market, compared to the 16.2% growth score of the benchmark Russell 1000 Growth Index. However, potential investors should be aware that the benchmark Russell 1000 Growth Index can turn out a higher growth score during the more established or steady growth phase of a normal cycle.

American Century’s investment methodology is grounded on owning good businesses.

“Good stocks start with good businesses,” Lewis said. “Good businesses become good stocks by incorporating acceleration, relative strength, and valuation.”

Specifically, good businesses exhibit traits like a competitive advantage, profitability, scalability and growth. In turn, these businesses are also good stocks that outperform due to an acceleration in fundamental business trends, attractive valuations and positive relative strength.

Financial advisors who are interested in learning more about these transformation companies can watch the webcast here on demand.


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