{"id":4372,"date":"2021-09-17T17:15:47","date_gmt":"2021-09-17T09:15:47","guid":{"rendered":"https:\/\/www.syfe.com\/magazine\/?p=4372"},"modified":"2024-04-02T14:00:13","modified_gmt":"2024-04-02T06:00:13","slug":"growth-value-momentum-top-etfs-for-each-investing-style","status":"publish","type":"post","link":"https:\/\/www.syfe.com\/magazine\/growth-value-momentum-top-etfs-for-each-investing-style\/","title":{"rendered":"Growth, Value, Momentum? Top ETFs For Each Factor Or Investment Style"},"content":{"rendered":"\n
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Factor investing is one of the most popular investment strategies. It has historically helped investors reduce portfolio volatility, improve returns, or enhance diversification. Its enduring popularity has given rise to countless debates about the merits of growth versus value investing (the Batman and Superman of the investing world).<\/p>\n\n\n\n

Factor exchange traded funds (ETFs) are a smart yet easy way to harness the power of factors (also called “smart beta<\/a>“). Keen to add them to your portfolio? Here are some popular factor ETFs across growth, value, and momentum to consider.<\/p>\n\n\n\n

What is growth investing?<\/strong><\/h2>\n\n\n\n

Growth is an investing style that focuses on companies that are expected to grow more rapidly than others. This can be in the form of revenue or profit growth. Growth companies typically have stock prices that are higher relative to their sales or profits. Investors are willing to pay more for these stocks now with the expectation of selling them at higher prices in the future.<\/p>\n\n\n\n

Growth stocks are generally riskier. If a company\u2019s growth disappoints, its stock price could tumble. As such, growth investing is often more suited to risk-tolerant investors with a longer time horizon.<\/p>\n\n\n\n

What is value investing?<\/strong><\/h2>\n\n\n\n

Value investors look for companies that have good fundamentals but have stock prices trading at a bargain. With time, the assumption is that markets will come to recognise the company\u2019s value and its stock price will rise.<\/p>\n\n\n\n

However, this upside potential is more limited compared to growth stocks. And while many growth stocks don\u2019t distribute dividends, value stocks often do. Overall, value stocks are seen as being less risky than growth stocks. <\/p>\n\n\n\n

What is momentum investing?<\/strong><\/h2>\n\n\n\n

Beyond the classic approaches of growth and value, momentum investing is another popular style. <\/p>\n\n\n\n

Momentum investing is all about riding winning trends. For instance, you may look at stocks whose prices have been continuously hitting new highs over days or weeks. Over the long term, high momentum stocks have been shown <\/a>to drive better returns than the market. <\/p>\n\n\n\n

This approach carries a higher degree of risk than most other investing strategies. If buys and sells are not timed correctly, investors may face significant losses. <\/p>\n\n\n\n

Don\u2019t forget about size <\/strong><\/h2>\n\n\n\n

When selecting an ETF, style is one key category to consider. The other is size. Size refers to the market capitalisation of the companies in which the ETF invests. <\/p>\n\n\n\n