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Is the Market Turning Risk-On Again? Growth ETFs to Watch
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Key Takeaways
Markets rebound as truce hopes lift sentiment and risk appetite.
Wall Street turns a little bullish on U.S. equities amid solid earnings outlook.
Growth ETFs like VUG, IWF and SPYG present opportunity as markets turn risk-on.
Optimism around a potential long-term truce in the Middle East lifted U.S. markets, with the S&P 500 Index rising about 0.93% over the past five days. The increase reflects growing investor confidence that ongoing diplomatic talks could yield a positive outcome.
The benchmark index has fully recouped the losses triggered by the onset of the conflict. March proved highly volatile, with tensions weighing on markets throughout the month, leading the index to decline about 7.7% from the start of the conflict.
However, the sentiment has reversed since then. The index has rebounded sharply, gaining roughly 8.5% since the beginning of this month, effectively recovering its earlier losses. The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, also underscores this shift. The index has declined 13.5% over the past week and about 34% over the past month, signaling easing volatility and a clear move toward a risk-on market environment.
Resilient Earnings Power Through Middle East Uncertainty
According to Reuters, BlackRock lifted its view on U.S. equities at the start of this week, echoing other Wall Street firms that see robust corporate earnings as a buffer against the fallout from the Middle East conflict.
The investment management company raised its rating to “overweight” from “neutral,” pointing to solid earnings expectations and the view that any oil price–related risks are unlikely to significantly derail global economic growth. BlackRock’s outlook follows comparable views put forward earlier by J.P. Morgan and Morgan Stanley.
According to LSEG I/B/E/S data, as of April 10, first-quarter profit growth estimates for S&P 500 companies increased to 13.9%, compared with 12.7% before the conflict began, suggesting that earnings expectations have remained resilient despite the conflict, as quoted on the abovementioned Reuters article.
Why Now May Be the Right Time for Growth Funds
This shift in risk sentiment makes increasing allocations to growth funds an increasingly attractive investment idea. The growth ETFs mentioned below have declined about 5.29% on average over the past month and are down roughly 8.79% on average year to date, potentially offering a compelling entry point for investors.
The performance of the S&P 500 Growth Index further supports this view. Over the past year, the growth index has delivered a strong return of 35%, outperforming the S&P 500 Value Index and the S&P 500 Index, which have gained 21.51% and 28.39%, respectively. The growth index has also outperformed both benchmarks since the start of this month, reinforcing its relative strength.
Exploring Growth ETFs
Investors, willing to take on more risk to potentially benefit from slightly improving market sentiment, can also explore growth ETFs. Growth funds typically excel during market uptrends, providing exposure to stocks with high growth potential.
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Is the Market Turning Risk-On Again? Growth ETFs to Watch
Key Takeaways
Optimism around a potential long-term truce in the Middle East lifted U.S. markets, with the S&P 500 Index rising about 0.93% over the past five days. The increase reflects growing investor confidence that ongoing diplomatic talks could yield a positive outcome.
The benchmark index has fully recouped the losses triggered by the onset of the conflict. March proved highly volatile, with tensions weighing on markets throughout the month, leading the index to decline about 7.7% from the start of the conflict.
However, the sentiment has reversed since then. The index has rebounded sharply, gaining roughly 8.5% since the beginning of this month, effectively recovering its earlier losses. The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, also underscores this shift. The index has declined 13.5% over the past week and about 34% over the past month, signaling easing volatility and a clear move toward a risk-on market environment.
Resilient Earnings Power Through Middle East Uncertainty
According to Reuters, BlackRock lifted its view on U.S. equities at the start of this week, echoing other Wall Street firms that see robust corporate earnings as a buffer against the fallout from the Middle East conflict.
The investment management company raised its rating to “overweight” from “neutral,” pointing to solid earnings expectations and the view that any oil price–related risks are unlikely to significantly derail global economic growth. BlackRock’s outlook follows comparable views put forward earlier by J.P. Morgan and Morgan Stanley.
According to LSEG I/B/E/S data, as of April 10, first-quarter profit growth estimates for S&P 500 companies increased to 13.9%, compared with 12.7% before the conflict began, suggesting that earnings expectations have remained resilient despite the conflict, as quoted on the abovementioned Reuters article.
Why Now May Be the Right Time for Growth Funds
This shift in risk sentiment makes increasing allocations to growth funds an increasingly attractive investment idea. The growth ETFs mentioned below have declined about 5.29% on average over the past month and are down roughly 8.79% on average year to date, potentially offering a compelling entry point for investors.
The performance of the S&P 500 Growth Index further supports this view. Over the past year, the growth index has delivered a strong return of 35%, outperforming the S&P 500 Value Index and the S&P 500 Index, which have gained 21.51% and 28.39%, respectively. The growth index has also outperformed both benchmarks since the start of this month, reinforcing its relative strength.
Exploring Growth ETFs
Investors, willing to take on more risk to potentially benefit from slightly improving market sentiment, can also explore growth ETFs. Growth funds typically excel during market uptrends, providing exposure to stocks with high growth potential.
Investors can consider Vanguard Growth ETF (VUG - Free Report) , iShares Russell 1000 Growth ETF (IWF - Free Report) , iShares S&P 500 Growth ETF (IVW - Free Report) , SPDR Portfolio S&P 500 Growth ETF (SPYG - Free Report) and iShares Core S&P U.S. Growth ETF (IUSG - Free Report) .