With the Federal Reserve signaling it could be at the end of its interest-rate tightening cycle, there’s potentially some ballast for growth stocks. The group is already showing signs of responsiveness as the growth-heavy Nasdaq-100 Index (NDX) is up 18.74% year-to-date, well ahead of the 5.94% returned by the S&P 500.
Impressive as growth stocks’ 2023 rebound is, it still represents performance over barely more than four months. That’s not an extensive enough period in which most investors can adequately capitalize on attractive long-term trends in the technology space.
In other words, market participants looking to capitalize on disruptive and secular growth trends want to put their time on their sides. After all, history confirms that the secular growth stories that have most rewarded investors didn’t mature overnight.
One way for ordinary investors to ease this burden is to consider exchange traded funds. With the right ETFs, investors can access secular growth benefits while removing the stock selection burden and leveraging time. Here are a few funds to consider.
Global X Blockchain & Bitcoin Strategy ETF (BITS)
The Global X Blockchain & Bitcoin Strategy ETF (BITS) lives up to secular growth billing and does so in unique fashion. True to its name, the actively managed ETF features exposure to bitcoin, by way of futures contracts, blockchain equities. The latter exposure is delivered via the Global X Blockchain ETF (BKCH). Currently, bitcoin futures account for 50.35% of the BITS roster with BKCH representing the rest.
Whether or not an investor is a believer in bitcoin, the reality is crypto is altering the payments landscape and blockchain is altering a slew of other industries beyond digital assets. In other words, BITS may be an unheralded secular growth offering.
“Cryptocurrencies’ decentralization makes them a potential alternative to traditional currencies, which are often subject to inflation and manipulation,” according to Global X research.
“A more secure, democratic, and equitable way to send, track, and manage money has broad appeal, especially for participants in emerging and developing countries, where trust in the banking system can be in short supply.”
Invesco NASDAQ 100 ETF (QQQM)
The Invesco NASDAQ 100 ETF (QQQM) is the lower cost alternative to the famed Invesco QQQ Trust (QQQ). Both ETFs follow Nasdaq-100 Index (NDX) and with that DNA, both are relevant for investors seeking secular growth access.
In terms of leveraging time benefits, QQQM is the more practical option by virtue of its annual expense ratio being five basis points below that of QQQ. Regarding secular growth access, both ETFs, owing to identical lineups, check that box with aplomb by way of growth-heavy lineups that provide capitalize on multiple innovative growth themes.
Take the case of artificial intelligence (AI), which is taking the investing and tech worlds by storm this year. That burgeoning industry has myriad investment implications and intersects with an assortment of other QQQM exposures.
“We believe generative AI will accelerate the adoption of AI to the point where it becomes ubiquitous,” notes BNP Paribas. “Machine learning AI is rising versus legacy rules-based AI, that is, AI models that learn from the data provided to them rather than from specific rules that are coded in. The change really began to accelerate around 2010 with the confluence of low-cost computing and storage, the existence of massive data sets, and advancements in algorithms within the AI field.”
ALPS Disruptive Technologies ETF (DTEC)
The ALPS Disruptive Technologies ETF (DTEC) is arguably one of the most attractive secular growth ETFs for set-it-and-forget investors because the fund provides exposure to 10 disruptive themes under the umbrella of a single ETF. That’s the embodiment of investment convenience.
Add to that, DTEC equally weights the industries represented in the fund, reducing concentration risk. Those segments are cloud computing, data and analytics, AI, mobile payments, fintech, 3D printing, healthcare innovation, cybersecurity, internet of things and clean energy.
“Thematic investing is about identifying and capturing structural trends in society and the economy,” noted BNP Paribas. “These global megatrends, such as tackling climate change, addressing inequality or enabling the digital & technological transition, often have end-points in the distant future that require a long-term approach to investing.”
On that note, DTEC could resonate with a broad swath of investors.
Original Link: https://www.nasdaq.com/articles/3-etfs-for-techs-secular-growth-stories
