What does it mean to invest in growth in this market environment? Growth stocks have gone on some hot streaks over the last few years, but in an ever-complicated market environment, identifying growth firms remains challenging. As such, investors may want to consider the benefits of patient, focused growth investing via active, fundamental research.
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While some growth strategies pick and track an index, leaving the thinking to index designers, a focused growth strategy operates differently. Thanks to an active remit, focused growth can lean more heavily on proprietary, bottom-up analysis. Consider, for example, a strategy like the Natixis Loomis Sayles Focused Growth ETF (LSGR ).
LSGR, managed by Aziz Hamzaogullari, CFA, takes a long-term, private equity approach to investing, per its annual report.
“We believe identifying those few businesses with such characteristics is an art, not a science,” said Hamzaogullari in the ETF’s annual report. “As a result of this rigorous approach, ours is a selective, high-conviction portfolio of typically 20-30 stocks.”
Patience, Research, and Growth Investing
That long-term approach privileges patience, with “research … completed well in advance of the opportunity to invest” per commentary on the strategy.
Not all growth strategies are created equal. By emphasizing patience and research, such a strategy can provide investors with high-conviction investments as opposed to broad tracking of ostensibly “growthy” areas like tech, for example. When constructing a portfolio, such a strategy can work as a pillar of an equity allocation.
How, then, has LSGR performed? The focused growth investing strategy returned 13.4% over the last three months. That has helped it outperform its ETF Database Category and FactSet Segment averages, per VettaFi data. For a 59 basis point fee, investors can get exposure to its focused growth investing approach.
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