You may feel your retirement savings portfolio is in jeopardy if you consider the returns your stocks and exchange-traded funds (ETFs) have generated during the last few months. However, it’s crucial to remember that the current volatility will pass and that it is best to focus on something other than it or even frequently check your accounts.
Nevertheless, now is an excellent time to review your retirement investing plan to ensure it is still on track to achieve your objectives. Given the dramatic decline in growth stocks and ETFs, buying some growth-oriented investments at lower prices would be worthwhile to boost your portfolio when the market reverses. Here are two growth ETFs that are less expensive, slightly riskier, and have strong growth potential.
1. Invesco S&P MidCap Momentum ETF
The Invesco S&P MidCap Momentum ETF (NYSEMKT: XMMO) is an underrated ETF. It follows the S&P Midcap 400 Momentum Index, a subset of the broader S&P Midcap 400 Index made up of about 80 mid-cap equities with the highest momentum scores or upward price movements.
The ETF is rebalanced twice a year, in March and September, and its market capitalization and momentum score are weighted. This aims to ensure that the portfolio always contains the mid-caps with the fastest growth rates. Energy currently accounts for the majority of the portfolio, or roughly 23%, as would be expected, given that energy equities have outperformed all others.
The two largest sectors in the portfolio are industrials (21%), followed by financials (12%). EQT, Targa Resources, and Carlisle Companies hold the top three rankings. The last company manufactures various building goods and equipment for industrial usage, while the first two are energy corporations.
Over time, the performance has been outstanding. As of August 31, the fund had lost 10.5% over the previous 12 months. However, its five- and 10-year annualized returns over the long run are strong, coming in at 16.1% and 14.2%, respectively. These returns are significantly higher than those of the S&P MidCap 400, which had annualized returns over five and ten years of 8.7% and 11.3%, respectively.
With a current price-to-earnings ratio of 14.7, the Invesco S&P MidCap Momentum ETF is also extremely inexpensive compared to the 38 average for mid-cap growth funds in its category. Given the current state of the market, an ETF with a lower price-to-earnings ratio may be less hazardous than one with a higher P/E ratio.
2. Invesco S&P 500 Equal Weight Technology ETF
The Invesco S&P 500 Equal Weight Technology ETF (NYSEMKT: RYT), another fund in the Invesco fund family, receives less publicity than other technology ETFs. However, this ETF performs exceptionally well and is designed to be less volatile than many competitors.
The ETF tracks the S&P 500 Equal Weight Information Technology Index, which comprises S&P 500 equities regarded as technology stocks. Contrary to others, the stocks are equally weighted, lowering volatility while generating the alpha needed to outperform the S&P 500 over the long term.
The ETF presently has 77 equities, with the semiconductor industry accounting for 26% of its total holdings. Services related to information technology come in second with 25% of the portfolio, followed by software with 24%. Apple and Microsoft have nearly the same weight as Citrix Systems or Visa because no position is larger than 1.47%.
The ETF has performed admirably, consistently outperforming the S&P 500. As at August 31, 2022, it had decreased by about 16.5% over the previous year. However, through August 31, it had an annualized return of 15.2% over the previous five years and 17.8% for the last ten years. In contrast, the S&P 500 had a five-year annualized return of 11.8% and a ten-year average return of 13.1% for the same time.
Additionally, this ETF has a P/E ratio of 23, which is lower than the typical technology fund’s P/E ratio of around 27. Its equal weighting, however, offers a bit higher consistency and a lower standard deviation than some of its competitors.
These two ETFs might be good choices for investors seeking long-term growth with less risk than other securities in their class.•••••••
Contact Information:
Email: [email protected]
Phone: 4022508277
Bio:
Carl Wyllie is an advisor focused in areas of Medicare, retirement, estate planning, and crisis planning. Carl works with individuals of all ages in planning for their retirement. He is uniquely effective in building working relationships between their families and elder care law attorneys to assist them in avoiding a healthcare crisis. Carl is particularly sensitive to helping provide the means for his clients to maintain their independence and dignity when a change in their health occurs due to the natural aging process.
