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Buying Growth ETFs on the Dip


Market upheaval sent investors running for the hills, but a few traders are sticking around. For the more risk-tolerant individual, there are some exchange traded funds that provide targeted growth opportunities.

Michael Bowman, portfolio manager at Wickham Investment Counsel, suggests looking into casinos, buyback stocks and spin-off names, writes Tim Shufelt for The Globe and Mail.

For example, the Market Vectors Gaming ETF (BJK) tracks casinos and resorts that derive at least half their revenue from gaming. U.S. companies make up a majority of the ETF’s holdings, but BJK also includes significant exposure to Macau, the gambling hub of Southeast Asia. [Gaming ETF Cools Ahead of Lunar New Year Revelry]

The PowerShares Dynamic Buyback Achievers Portfolio (PKW) includes a portfolio of stocks that have reduced outstanding shares by at least 5% over the past year. Share buybacks have been a popular way for companies to utilize extra cash reserves to add value to their share price. [Float Shrink ETF Capitalizes on Market Shrinkage]

The Guggenheim Spin-Off ETF (CSD) tracks companies that have “spun off” from a parent company within the past 30 days, but no older than six months. “Numerous academic studies suggest that most spinoff companies have experienced significant capital appreciation,” Bowman said. [ETFs for Your Inner Icahn]

Deborah Frame, vice president of investments at Cougar Global Investments, also suggests taking a look at small-cap companies. For instance, the iShares Core S&P Small-Cap ETF (IJR) provides a exposure to the “continuing recovery of the U.S. economy,” Frame said.

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