Cyclical stocks, small caps, and emerging markets equities are among the assets receiving renewed attention to start 2021, but advisors should also remain abreast of the latest in the disruptive growth arena.
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.”
The coronavirus pandemic and the dramatic shifts it caused highlight the efficacy of disruptive growth investing.
“While we believe in the current cyclical rotation back toward size, value and EM, we also believe that the COVID-19 pandemic fundamentally and perhaps permanently altered the way we work, socialize and entertain ourselves,” said WisdomTree Model Portfolio Chief Investment Officer Scott Welch in a recent note. We believe this has led to certain ‘thematic’ sectors and industries that are showing huge growth trends.”
The Time Is Right for Disruptive Growth
Be it e-commerce, fintech, healthcare innovation, streaming entertainment, or other concepts, the model portfolio provides exposure to an array of seismic shifts taking place in the investing landscape, a trend thematic ETFs leverage better than broader old-guard counterparts.
Disruptive growth “industries include (but are not limited to) financial technology, cloud-based computing, platform-oriented businesses, human genomics, cybersecurity and online gaming and e-sports,” says Welch.
‘Disruptive growth’ is becoming a prominent investment catchphrase, and rightfully so. But it remains a vexing proposition for some investors.
WisdomTree’s newest model portfolio features six ETFs at weights of 15% to 20% addressing disruptive growth segments, such as cloud computing, genomics, and Esports/gaming.
The WisdomTree model portfolio “carries high valuations corresponding to its high growth rates, and it will be volatile, but for advisors looking to capitalize on a thematic growth trend, we think it may be very interesting,” according to Welch.
For more on how to implement model portfolios, visit our Model Portfolio Channel.