Recent market action suggests a rotation into cyclical value stocks is occurring, but that doesn’t mean advisors should abandon growth.
In fact, now may be a good time to focus on growth with a disruptive twist. One way to do that is with the WisdomTree Disruptive Growth Model Portfolio.
“The WisdomTree Disruptive Growth ETF Model Portfolio targets structural growth themes that are believed to drive innovation across different industries and segments of society in the future,” according to the issuer. “The themes and affiliated ETFs selected for inclusion will typically have above-market growth projections. The model portfolio seeks maximum long-term capital appreciation and may include both WisdomTree and non-WisdomTree ETFs.”
Disruptive growth momentum kickstarted by the pandemic is likely to be long-lasting.
“We believe this has led to certain ‘thematic’ sectors and industries that are showing huge growth trends, and we think these trends will be with us for years to come,” writes WisdomTree’s Scott Welch. “These industries include (but are not limited to) financial technology, cloud-based computing, platform-oriented businesses, human genomics, cybersecurity and online gaming and e-sports.”
A Diverse Model Portfolio
Disruptive growth includes segments like Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics, Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments.
Components in the WisdomTree model portfolio benefit from the shifting bases of technology infrastructure to the cloud, enabling mobile, new, and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure, and services, internet-based products and services, new payment methods, big data, the internet of things, social distribution and media, and more.
“It is true that since the announcement of potential COVID-19 vaccines back in early November, we have seen a cyclical rotation back toward value and (especially) small-cap stocks, but that does not mean that growth stocks have fallen out of favor—they just have not gone up as much as value and small-cap stocks. We interpret that to mean that the disruptive growth story still has room to run,” notes Welch.
WisdomTree’s Disruptive Growth Model Portfolio features six exchange traded funds, four of which are from third-party issuers. That quartet addresses fast-growing themes, such as genomics, fintech, cybersecurity, and online gaming.
For more on how to implement model portfolios, visit our Model Portfolio Channel.