We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Top-Ranked Growth ETFs to Buy As Rate Hike Momentum Cools
Read MoreHide Full Article
As expected, the Federal Reserve boosted its benchmark interest rate by 50 basis points this week. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation. The latest rate hike took the benchmark rate to the range of 4.25% to 4.5%, its highest level in 15 years. However, the latest hike was lower than its previous four three-quarter-point hikes.
The policymakers also forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. That suggests that the Fed is prepared to hike its benchmark rate by an additional three-quarters of a point and then stay put until the end of 2023. This is quite expected as U.S. inflation is showing signs of peaking. In fact, the consumer price index for November slowed to a one-year low.
The Fed now expects median interest rates to reach 5.1% next year, 4.1% in 2024, and 3.1% in 2025, a higher level than previously indicated. Meanwhile, GDP growth projections were revised higher for this year (0.5% versus 0.2% projected previously) but lowered for 2023 (0.5% versus 1.2%) and 2024 (1.6% versus 1.7%). PCE inflation projections have been revised higher for 2022 (5.6% versus 5.4%), for 2023 (3.1% versus 2.8%) and for 2024 (2.5% versus 2.3%).
The cues of cooling Fed rate hike momentum should bode well for growth investing as the segment has suffered a lot in 2022. A buy-the-dip strategy could be beneficial for the segment. Against this backdrop, below we highlight a few top-ranked growth ETFs that have outperformed the Nasdaq-100 ETF QQQ (down 30.4%) this year and may exhibit an uptrend in the coming days if the inflation figures keep coming low.
ETFs in Focus
First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) – Down 22.7%
The underlying NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index. The fund charges 59 bps in fees.
Invesco Dynamic Large Cap Growth ETF (PWB - Free Report) – Down 24.7%
The underlying Dynamic Large Cap Growth Intellidex Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The fund charges 55 bps in fees.
Invesco S&P 500 Pure Growth ETF (RPG - Free Report) – Down 26.3%
The underlying S&P 500 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P 500 Index. The fund charges 35 bps in fees.
The underlying S&P Midcap 400 Momentum Index is composed of securities with strong growth characteristics selected from the Russell Midcap Index. The fund charges 33 bps in fees.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
4 Top-Ranked Growth ETFs to Buy As Rate Hike Momentum Cools
As expected, the Federal Reserve boosted its benchmark interest rate by 50 basis points this week. Fed Chair Jerome Powell reiterated the central bank's commitment to hike rates further in order to tame multi-decade highs in inflation. The latest rate hike took the benchmark rate to the range of 4.25% to 4.5%, its highest level in 15 years. However, the latest hike was lower than its previous four three-quarter-point hikes.
The policymakers also forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023, before being slashed to 4.1% in 2024. That suggests that the Fed is prepared to hike its benchmark rate by an additional three-quarters of a point and then stay put until the end of 2023. This is quite expected as U.S. inflation is showing signs of peaking. In fact, the consumer price index for November slowed to a one-year low.
The Fed now expects median interest rates to reach 5.1% next year, 4.1% in 2024, and 3.1% in 2025, a higher level than previously indicated. Meanwhile, GDP growth projections were revised higher for this year (0.5% versus 0.2% projected previously) but lowered for 2023 (0.5% versus 1.2%) and 2024 (1.6% versus 1.7%). PCE inflation projections have been revised higher for 2022 (5.6% versus 5.4%), for 2023 (3.1% versus 2.8%) and for 2024 (2.5% versus 2.3%).
The cues of cooling Fed rate hike momentum should bode well for growth investing as the segment has suffered a lot in 2022. A buy-the-dip strategy could be beneficial for the segment. Against this backdrop, below we highlight a few top-ranked growth ETFs that have outperformed the Nasdaq-100 ETF QQQ (down 30.4%) this year and may exhibit an uptrend in the coming days if the inflation figures keep coming low.
ETFs in Focus
First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) – Down 22.7%
The underlying NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index. The fund charges 59 bps in fees.
Invesco Dynamic Large Cap Growth ETF (PWB - Free Report) – Down 24.7%
The underlying Dynamic Large Cap Growth Intellidex Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The fund charges 55 bps in fees.
Invesco S&P 500 Pure Growth ETF (RPG - Free Report) – Down 26.3%
The underlying S&P 500 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P 500 Index. The fund charges 35 bps in fees.
Invesco S&P MidCap Momentum ETF (XMMO - Free Report) – Down 14.8%
The underlying S&P Midcap 400 Momentum Index is composed of securities with strong growth characteristics selected from the Russell Midcap Index. The fund charges 33 bps in fees.