As growth takes a hit, fight back with active management


gGrowth names have been hit so far in 2022, as indicated by the S&P 500 Growth Index, which is down 18% for the year. It’s a confusing market environment where strong corporate earnings aren’t enough to ease inflation fears.

“We are in a turbulent environment. You see these mini crashes and mini rallies,” says Tim Ghriskey, senior portfolio strategist, Ingalls & Snyder, New York. “We seem to be bouncing up and down. It’s earnings season, of course. Earnings look good to me so far.”

“There were some weaknesses, especially in some income,” adds Ghriskey. “You look at JetBlue, for example. Earnings so low, relative to expectations. Earnings themselves look good, look at GE, look at 3M. Good earnings, good earnings, both above expectations. But some investors may look at some of that revenue and I think there may be weaknesses.”

Potential growth investors can take comfort in the fact that there are good deals, especially in the big tech space which saw a lot of strength during the height of the pandemic. Investors can choose to gain exposure to big tech with a passive index, but in times of rampant inflation, another option would be active management.

^ SPXG data by YCharts

Exposure to active growth

For exchange-traded funds (ETFs) that employ an active management style, there is the T. Rowe Price Growth Stock ETF (TGRW). With TGRW, adding growth to a portfolio doesn’t have to be a complicated task.

As mentioned, with TGRW, investors can gain exposure to household names in the tech industry and other growth opportunities while mitigating risk. The portfolio manager favors companies that are well positioned to take advantage of powerful secular trends, including those that use innovation to disrupt less efficient business models. By emphasizing sustainable earnings and free cash flow, the strategy stands out among growth-oriented funds. When inflation is running high, active management is essential, and the technology sector, in particular, will require skillful management to pick the best stocks to weather the storm.

For more news, insights and strategy visit the Active ETF channel.

Learn more at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source link


Comments are closed.