Growth names have been taking a hit so far in 2022, as indicated in the S&P 500 Growth Index, which is down 18% for the year. It’s a perplexing market environment where strong corporate earnings aren’t enough to mute inflation fears.
“We’re 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 bounce up and down. It’s earnings season, obviously. The earnings so far look good to me.”
“There have been some weaknesses, especially in some revenues,” adds Ghriskey. “You look at JetBlue, for instance. Such weak revenues, relative to expectations. The earnings themselves look good, look at GE, look at 3M. Good earnings, good revenues, both above expectations. But some investors may look at some of these earnings and think there may be some weaknesses.”
Prospective growth investors can find solace that there are bargains, especially in the big tech arena that saw much strength during the height of the pandemic. Investors can opt to get exposure to big tech with a passive index, but in today’s contentious times where inflation is rampant, another option would be active management.
Active Growth Exposure
For exchange traded funds (ETF) that employ an active management style, there’s 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 get exposure to household names in the tech sector and other growth opportunities while mitigating risk. The portfolio manager favors companies that are positioned to benefit from powerful secular trends, including those that are using innovation to disrupt less efficient business models. With an emphasis on durable earnings and free cash flow, the strategy is distinctive among growth‑oriented funds. When inflation is running rampant, getting active management is a must, and the technology sector, in particular, will require deft management to pick the best stocks to weather the storm.
For more news, information, and strategy, visit our Active ETF Channel.