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Investors loved “story stocks”. Now they love history ETFs.
A story stock is not driven by profits or assets, but by a simple and enticing narrative: a dynamic new boss, dazzling technology, or customers turning to its products. An ETF story is an exchange traded fund that does not invest in an entire market or a single sector, but rather in a concept or trend.
It is probably better to buy an ETF story rather than an action story; at least the fund is somewhat diversified. But historical ETFs come with their own risks.
Often called thematic ETFs, these funds cut across all sectors, trying to capitalize on ideas such as alternative energies, cloud computing or 3D printing. Others are buying stocks that could benefit from more people working from home, demanding sexual or racial diversity, or spending money on their pets.
The assets of these funds have grown an average of 45% per year over the past three years, says William Baun of the Fuse Research Network in Needham, Mass.
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