Displaying items by tag: equities

Growth ETFs offer a simplified way to invest in high-potential stocks without the time-consuming analysis required for picking individual winners. Key factors to consider when choosing a growth ETF include its long-term performance, sector diversification, expense ratio, and top holdings. 

The best ETFs typically maintain strong five- and ten-year returns, low costs, and broad exposure to tech-heavy but diversified portfolios. Notable examples include the iShares Russell Top 200 Growth ETF (IWY), Schwab U.S. Large-Cap Growth ETF (SCHG), and Vanguard Mega Cap Growth ETF (MGK), all boasting annualized 5-year returns near or above 18%. 

While many of these funds are concentrated in companies like Apple, Amazon, and Microsoft, they differ in fees, yield, and sector weightings. 

Finsum: Overall, growth ETFs offer an efficient path to access strong market performers with minimal effort and competitive returns.

After Moody’s downgraded the U.S. credit rating from Aaa to Aa1, investors sold off government bonds, driving long-term Treasury yields sharply higher. This spike in yields raises borrowing costs for consumers and businesses alike, potentially slowing economic growth. 

Analysts warned that higher rates could ripple across mortgages, auto loans, and business financing, putting pressure on spending and investment. While credit downgrades by S&P and Fitch in past years had limited long-term economic impact, the timing of Moody’s move—amid heightened bond market volatility and mounting national debt—has amplified market anxiety. 

Some experts view the downgrade as a long-anticipated but symbolically important warning about unsustainable fiscal trends. Still, markets showed resilience, with equities rebounding by midday and Treasury yields pulling back slightly from their highs.

Finsum: Are equities investors neglecting the proper risk to US debt right now? Investors should keep close tabs on how this evolves

JPMorgan CEO Jamie Dimon cautioned that inflation risks remain elevated and markets are too complacent, despite the recent tariff pause between the U.S. and China. Speaking at JPMorgan’s investor day, he emphasized the potential for stagflation—sluggish growth, high unemployment, and persistent inflation—as more likely than many assume. 

While markets rallied on the news of tariff reductions, Dimon noted that the economic impact of still-high duties has yet to fully hit. 

JPMorgan lowered its recession odds for 2025 to 50%, but warned that unresolved trade tensions could reignite instability. Experts echoed that the current tariff rollback is temporary, and the underlying threat of renewed trade conflict looms. 

Finsum: Dimon’s remarks suggest investors are underestimating long-term risks, particularly if inflationary pressures persist amid constrained economic growth.

Francois Rochon once observed that true investing success comes not from avoiding market volatility but from using it to one’s advantage—a mindset that resonates deeply today. 

Markets, by nature, swing between extremes, and the recent months have been no exception, testing the patience of even seasoned investors. Rather than reacting emotionally to these shifts, investors are increasingly turning to structured approaches that bring consistency to decision-making. 

One such approach is factor-based investing, which allocates capital based on specific attributes like profitability, low volatility, or long-term momentum. This strategy reduces reliance on market timing and instead builds portfolios grounded in time-tested characteristics. 

Finsum: In uncertain environments, such disciplined frameworks can offer clarity and help investors stay focused on enduring outcomes rather than short-term noise.

Although it's common to think small-cap stocks suffer most during recessions, the data tells a more nuanced story. Analysis of developed markets shows that in 64% of years when GDP declined, small caps actually outperformed large caps—a rate even higher than their typical performance advantage. 

This finding challenges the belief that economic slowdowns always disadvantage smaller firms. One reason may be that financial markets are inherently forward-looking, often pricing in future recovery well before it's visible in economic data. 

As a result, the size premium—where small caps outperform—can still emerge during downturns. Ultimately, small-cap strength isn't strictly tied to GDP trends, underscoring the importance of long-term diversification over short-term predictions.

Finsum: This is much different than the interest rate driven volatility several years ago, this could be a great time to capitalize