Investing in disruptive growth fare is compelling, but it can be a tricky landscape to navigate. A new model portfolio offers advisors an efficient avenue to broad-based disruptive growth exposure.
WisdomTree recently launched the Disruptive Growth Model Portfolio, which joins the issuer’s broader series of Modern Alpha model portfolios.
“A word that has gained importance in the global economy is “disruptive.” What that means in an economic and investment sense is twofold,” said WisdomTree Chief Investment Officer – Model Portfolios Scott Welch in a recent note. “It can mean either (a) companies that are “disrupting” preexisting industries (e.g., Uber vs. taxis or Netflix vs. movie theaters) or (b) new industries that are breaking new ground on how we will work and live going forward (e.g., cloud computing, human genomics and online gaming).”
Disruptive technologies are changing the way new products and services are being brought to market, which is already being seen in the development of artificial intelligence and robotics. As the number of companies that focus on highly advanced computer integration grows, so does the number of targeted ETF strategies that have been designed to capture the best growth opportunities.
Practical Allocations for a Disruptive Environment
WisdomTree’s new 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.
Fintech focuses on innovations that are revolutionizing the financial industry. Regulatory changes have shifted the economics of intermediating capital, re-configuring the value-chain, and allowing exploitation by competitors.
Genomics companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals, and enhancing our quality of life.
WisdomTree offerings in the model portfolio are the WisdomTree Cloud Computing ETF (WCLD ) and the WisdomTree Modern Tech Platforms Fund (PLAT ).
PLAT offers investors access to companies that are generating revenue from platform business models – these are companies with non-linear business models focused on creating value by facilitating interactions between two or more groups through technology.
WCLD seeks to track the price and yield performance, before fees and expenses, of the BVP Nasdaq Emerging Cloud Index, an equally weighted index designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers.
“In either case, the companies that populate these ‘spaces’ have shown some of the highest growth rates in the world over the past several years, whether measured by sales growth or valuations, and investors have reacted accordingly,” notes Welch.
