What do Biogen (BIIB), LinkedIn (LNKD) and Lannett (LCI) have in common?
These stocks either are, or have been, a component of the ever changing IBD 50, an index created by Investors Business Daily that tracks growth stocks.
Growth is an area of the market that often appeals to investors because with growth comes the potential of outsized returns. However, growth stocks are often extremely volatile; trading at a multiple to sales rather than earnings, which can make investors jittery.
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Making the space all the more perilous, sometimes growth companies have no profits at all, and if anything calls growth into question pros often sell fast and hard, leaving individual investors holding the bag.
However, a new ETF came onto the market recently that mitigates at least some of the volatility.
Called the Innovator IBD 50 ETF (FFTY), the exchange traded fund tracks the IBD 50 index. “We’ve taken the IBD 50 which we’ve published for 12 years and licensed the list and the name to our partner Innovator Funds,” explained Chris Gessel executive editor of Investor’s Business Daily.
The IBD 50 typically outperforms the broad S&P 500 (^GSPC) and because the components of the index change regularly, the ETF is actively managed.
Of course, as with all stock market investments, there is no guarantee of gains. However, if you’re interested in holding growth stocks, the fund may provide exposure and at the same time, eliminate some of the risk associated with single stocks, such as a management shake-up or unexpected geo-political event.
“Anyone who’s looking to be aggressive wants growth in their portfolio,” noted Gessel. “And these are aggressive, fast growing names.”
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