Cathie Wood Projects Market Rotation to Growth: ETFs to Play

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Ark Invest’s Cathie Wood, who has a huge-fan following in the investment world for her stock picking skills, has again emphasized on her prediction that a slowdown in the economic growth in the United States will provide strength to growth stocks. In this regard, she said that “We do believe that the market will start rotating back toward growth and innovation,” per a Reuters article.

Wood believes that the sluggish August jobs report and weakening consumer price index figures signal that the US economy might grow at a slower pace than the projected figure by market analysts at the beginning of 2021 (according to a Reuters article). Cathie Wood’s portfolio holds some growth stocks like Tesla TSLA, Teladoc Health TDOC and Unity Software U and has lost about 5.5% year to date.

There are still certain bright spots in the investing world that can help stimulate a market rally. President Joe Biden has outlined a very effective plan to increase the vaccination rate and control the outbreak. He has made it mandatory for federal employees to get the COVID-19 vaccination, per a CNBC article. The Biden government will also issue guidelines to the Labor Department for imposing vaccine mandates for employers with more than 100 employees or run weekly tests.

In this regard, Fundstrat’s Tom Lee has noted that “Ultimately, we see stocks finishing September strongly. Delta variant organically looks to be slowing… White House plan really brings hammer to containing COVID-19,” as mentioned in a CNBC article.

New data from the CDC reflects that the seven-day average of new COVID-19 cases through Sep 10 came in at around 136,000, down from 157,000 average new cases at August-end, according to a CNBC article.

The latest ISM Manufacturing Purchasing Managers’ Index (PMI) data for the United States is painting a rosy picture for the industrial sector. The metric rose to 59.9 in August from 59.5 in July and surpassed forecasts of 58.6, per a Reuters article. Any reading above 50% indicates expansion in U.S. manufacturing activities. Notably, the manufacturing sector, which makes up 11.9% of the U.S. economy, saw the reading witnessingthe 15th consecutive month of growth.

Growth ETFs to Ride the Tide

Investors seeking to capitalize on the strong trends should consider growth ETFs. However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility when compared to value stocks. Below, we highlight a few growth ETFs that could be added to the portfolio.

Invesco Dynamic Large Cap Growth ETF PWB

The fund is based on the Dynamic Large Cap Growth Intellidex Index. It charges an expense ratio of 0.56%. PWB carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: Growth ETFs Looking Great After an Impressive August).

SPDR Portfolio S&P 500 Growth ETF SPYG

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P 500 Growth Index. It charges an expense ratio of 0.04%. SPYG carries a Zacks ETF Rank #2, with a Medium-risk outlook (read: Top ETF Stories of August).

iShares S&P 500 Growth ETF IVW

The fund provides exposure to large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market. It charges an expense ratio of 0.18%. IVW carries a Zacks ETF Rank #2, with a Medium-risk outlook.

Schwab U.S. Large-Cap Growth ETF SCHG

The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It charges an expense ratio of 0.04%. SCHG carries a Zacks ETF Rank #2, with a Medium-risk outlook (read: Tap the Current Market Momentum With These ETF Strategies).

Vanguard S&P 500 Growth ETF VOOG

The fund seeks to track the performance of the S&P 500 Growth Index. It charges an expense ratio of 0.10%. VOOG carries a Zacks ETF Rank #2, with a Medium-risk outlook.

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Tesla, Inc. (TSLA): Free Stock Analysis Report
 
Teladoc Health, Inc. (TDOC): Free Stock Analysis Report
 
Invesco Dynamic Large Cap Growth ETF (PWB): ETF Research Reports
 
Schwab U.S. LargeCap Growth ETF (SCHG): ETF Research Reports
 
iShares S&P 500 Growth ETF (IVW): ETF Research Reports
 
SPDR Portfolio S&P 500 Growth ETF (SPYG): ETF Research Reports
 
Vanguard S&P 500 Growth ETF (VOOG): ETF Research Reports
 
Unity Software Inc. (U): Free Stock Analysis Report
 
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