Your everyday investor may be satisfied with simply tracking the S&P 500 and its associated indexes, but what about outperforming it? Some strategies can do so, but in the long term, many active strategies fall short. However, with its deep growth ETF wrapper, one strategy has managed to do so. That outperformance may see investors closely examine whether such a strategy makes sense for them moving forward.
See more: The Patient Art of Focused Growth Investing
That ETF, the Natixis Loomis Sayles Focused Growth ETF (LSGR ), launched in 2023. In less than a year, it’s already surpassed $100 million in AUM and looks set to hit $150 million in the near term. However, its performance stands out more than its AUM alone. According to YCharts, LSGR has returned 29% since it launched, compared to 22.4% for the S&P 500 Total Return Index (SPXTR).
Getting Deep Growth in an ETF
So, how has the strategy gone about investing in that time? LSGR leans on fundamental research from the team of Loomis Sayles. The deep growth ETF takes an active approach and holds just 20-30 U.S. firms.
It generally looks to large-cap growth stocks despite having the freedom to invest across market caps. Not only does it look to regular stocks, but also to ETNs, REITs, and preferred stocks should they meet the managers’ standards. The deep growth ETF looks for undervalued stocks based on proprietary cash flow models while also selling securities based on poor earnings, declining prospects, or more attractive opportunities.
Moving forward, a focused, growth-oriented active ETF can appeal, given how much uncertainty pervades the macro outlook. Many investors already have significant core allocations, but LSGR could make a nice addition on top of that.
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