Here's how to get aggressive with your money.
So-called "aggressive growth" exchange-traded funds are geared toward exactly that: aggressive growth stocks, which typically comes with some heightened risk. But that's the cracked egg that makes the omelet. Investors of most stripes should have at least some money allocated toward riskier growth stocks, even in an uncertain environment. And aggressive growth ETFs might be some of the most interesting funds available. That's because the niche includes things like "thematic" funds that play on some of the market's biggest mega trends, as well as exotic ETF strategies that squeeze growth potential out of various areas of the market. Here are 10 ways to add aggressive growth to your portfolio.
SPDR S&P Internet ETF (ticker: XWEB)
The dot-com bubble burst of 2000 scared a number of investors off internet stocks -- but, of course, those who swore off internet stocks missed out on the rip-roaring gains of Amazon.com (AMZN) and Facebook (FB). While the internet is an aging growth industry, it's a growth industry nonetheless -- particularly in the age of social distancing. The XWEB ETF is one of the most direct ways to invest here, offering exposure to the likes of enterprise software provider Akamai Technologies (AKAM) and online pet products merchant Chewy (CHWY).
Amplify Online Retail ETF (IBUY)
One of the biggest growth engines in the internet space has been online retail, and that should continue as brick-and-mortar stores remain closed or limited in many ways thanks to the coronavirus outbreak. You can harness this potential via Amplify's IBUY ETF, which invests in a basket of 41 companies that derive at least 70% of their revenues from online or virtual sales. Holdings are split among specialty retail like postage firm Stamps.com (STMP), online marketplaces like eBay (EBAY) and online travel marketplaces like Expedia (EXPE).
ETFMG Drone Economy Strategy ETF (IFLY)
Amazon has long piqued Americans' interest in drones with promises of eventual drone delivery, but many other publicly traded companies have already made a practical dent in the space. IFLY holds more than 60 "primary" and "secondary" drone companies that are weighted (up to a certain cap) based on the drone component of their business. IFLY does hold a few blue chips like Northrop Grumman (NOC) and Honeywell International (HON), but the real risk potential comes from the likes of small-caps AeroVironment (AVAV), an unmanned aircraft specialist, and Parrot SA, a French wireless products manufacturer -- both of which account for around 10% of the portfolio.
Expenses: 0.75%, or $75 annually for every $10,000 invested
Defiance 5G Next Gen Connectivity ETF (FIVG)
The telecommunications industry is just about the surest investment you can make in a digital age, where consumers and businesses are increasingly reliant on being connected. But the aggressive growth potential of this 5G ETF harnesses a mix of traditional big telecom names like Ericsson (ERIC) and Qualcomm (QCOM) alongside lesser-known tech stocks like Xilinx (XLNX) to provide investors a way to play the big spending and big growth opportunity that comes with upgrading the world's communications infrastructure.
Global X Gold Explorers ETF (GOEX)
Gold exploration is one of the riskiest ways to invest in gold, but it also provides some of the most explosive growth potential. That's because even whiffs of success finding new sources of gold tend to drive stock prices through the roof, in part because of merger and acquisition interest. GOEX invests in about 50 gold exploration companies, clustered heavily in Canada and Australia. And GOEX rebalances regularly, but short-term spikes in individual names can result in their growing to a big part of the portfolio -- like Novagold Resources Inc. (NG), currently good for more than 6% of GOEX's value.
First Trust RiverFront Dynamic Developed International (RFDI)
Not all aggressive growth ETFs are industry-specific. First Trust's RFDI is one of several geographically centered ETFs in the space, with this one dedicated to developed markets such as Japan (25%), the U.K. (15%) and Switzerland (10%). RFDI uses a proprietary methodology that focuses on momentum, among other factors, and also utilizes currency hedging. Here, however, overweights are not an issue, as the top holding currently is Swiss consumer giant Nestle (NSRGY) at just 3.1%, followed by drugmaker Roche (RHHBY) at 2.4%.
Franklin LibertyQ Emerging Markets ETF (FLQE)
The FLQE is an aggressive growth fund that actually tries to limit risk somewhat, using four investment style factors -- quality, value, momentum and low volatility -- to determine its portfolio. FLQE offers exposure to nearly 30 countries, with the largest weights going to the relatively stable markets of China (23%) and Taiwan (14%). FLQE avoids risks in parts by biasing the portfolio toward less aggressive sectors like financials (19% of the portfolio) and materials (14%) but using its screening methodology to ensure investors aren't limiting their growth potential.
Janus Small/Mid Cap Growth Alpha ETF (JSMD)
Investors typically seek out growth from the mid- and small-cap areas of the market, often buying index funds to access broad swaths of smaller stocks. Janus' JSMD tries to deliver ... well, alpha ... by evaluating factors including profitability and capital efficiency to "deliver sustainable growth in a variety of market environments." While things have been rocky for small caps lately, JSMD has managed to outperform the Russell 2000 midcap index. Right now, JSMD is tilted toward IT (26%) and health care (26%), with top holdings including Masimo Corp. (MASI) and Paycom Software (PAYC).
Global X Cloud Computing ETF (CLOU)
A technology ETF focused on the high growth potential of cloud computing stocks, this Global X fund invests in well-known companies like Amazon with its massive AWS arm alongside smaller companies you may never have heard of. These include Zscaler (ZS), a cloud-based cybersecurity provider that is the top position right now at more than 5% of the ETF's portfolio of roughly 36 total stocks. The global cloud computing market is expected to top $620 billion by 2023 and expand at a roughly 18% annual growth rate. This fund is an easy way to play that trend.
Invesco DWA Tactical Sector Rotation Portfolio (DWTR)
Last but not least -- but certainly sleek -- is Invesco's DWTR, a four-holding "fund of funds" that uses ETFs to target relative strength in the market and invest there. The DWTR at any given moment will invest in up to four of nine sector funds to capture momentum, and will partially to cash when there's not enough relative strength to chase. At the moment, DWTR is invested in four DWA sector ETFs -- industrials (PRN), financial (PFI), health care (PTH) and technology (PTF). While management expenses for this ETF are just 15 basis points annually, acquired fund fees from its holdings tack on another 60 bps.
ETFs to buy for aggressive growth:
-- SPDR S&P Internet ETF (XWEB)
-- Amplify Online Retail ETF (IBUY)
-- ETFMG Drone Economy Strategy ETF (IFLY)
-- Defiance 5G Next Gen Connectivity ETF (FIVG)
-- Global X Gold Explorers ETF (GOEX)
-- First Trust RiverFront Dynamic Developed International (RFDI)
-- Franklin LibertyQ Emerging Markets ETF (FLQE)
-- Janus Small/Mid Cap Growth Alpha ETF (JSMD)
-- Global X Cloud Computing ETF (CLOU)
-- Invesco DWA Tactical Sector Rotation Portfolio (DWTR)