Growth vs. value: Here’s how ETFs distinguish

Article Excerpt

Among the wide variety of investing styles, growth and value are among the most popular. Growth investors focus on companies that are expected to grow their revenues and profits faster than the rest. Bargain or value stocks will typically trade lower than their financial fundamentals suggest. They are perceived as undervalued and have the potential to rise. Growth companies can offer higher upside potential and are more typically expensively priced as investors expect profits to grow quickly in the future. But, if they disappoint, their share prices may drop sharply. Nevertheless, apart from the general definition of growth stocks, there are many different ways that ETF managers construct growth stock portfolios. Here are some of the methods used by managers to identify growth stocks. Here’s how indexes spot growth versus value The largest and most successful growth ETFs track indexes provided by one of the major index providers such as S&P, MSCI, or FTSE Russell. The S&P methodology focuses on six factors to determine the growth…