Etfs: Aggressive Investment Strategy Or Safe Bet?

Exchange-traded funds (ETFs) are a type of investment fund that holds a collection of stocks, bonds, or other assets. Aggressive ETFs are a type of fund that utilizes an aggressive investment style, typically carrying a high-risk, high-reward profile. These funds aim to provide growth using aggressive tactics and they are often characterized by high levels of risk and the potential for substantial returns. Aggressive ETFs are usually diversified across multiple asset classes, such as stocks, bonds, and cash, with a focus on maximizing returns. They are commonly associated with growth stocks, which are companies exhibiting above-average growth profiles in terms of revenue and earnings.

Aggressive ETFs and high risk

Aggressive ETFs are a type of investment fund that utilises an aggressive style and carries a high-risk, high-reward profile. They are designed to provide growth using aggressive tactics, which means they can offer high returns but also come with a higher level of risk.

Aggressive ETFs are generally aimed at investors who are comfortable with taking on more risk in exchange for potentially higher returns. These types of funds often invest in areas such as disruptive technology, artificial intelligence, energy infrastructure, and emerging market equities.

One example of an Aggressive ETF is the iShares Core Aggressive Allocation ETF, which seeks to provide a diversified core portfolio based on more aggressive risk considerations. This particular fund has an expense ratio of 0.19% and a net expense ratio of 0.15%.

It's important to remember that investing in Aggressive ETFs carries a higher level of risk compared to more conservative investment options. These funds may experience significant price fluctuations and are not suitable for everyone. Investors should carefully consider their investment objectives, risk tolerance, and conduct their own research before investing in Aggressive ETFs or any other type of investment fund.

Aggressive growth ETFs

• IShares Core Aggressive Allocation ETF: This ETF offers a simple way to build a diversified portfolio with a focus on aggressive risk considerations. It aims to provide a broad mix of global bonds and stocks, harnessing the experience of BlackRock and the efficiency of iShares ETFs. The fund's objective is to track the investment results of an index composed of underlying equity and fixed-income funds, representing an aggressive target risk allocation strategy.
• Invesco QQQ Trust Series I: This ETF provides exposure to 100 of the most innovative companies trading on the Nasdaq stock exchange. It has a strong focus on technology stocks, with additional holdings in communication services and consumer discretionary sectors. The fund has historically outperformed the SPDR S&P 500 ETF Trust, with a higher average annualized total return.
• IShares S&P 500 Growth ETF: This ETF offers exposure to growth-oriented stocks within the S&P 500. It selects stocks based on growth characteristics such as three-year changes in earnings per share and sales-per-share growth rate. The fund has a reasonable management fee of 0.18% and has delivered an annualized return of about 7.9% since its inception in May 2000.
• Vanguard Growth ETF: With a low expense ratio of 0.04%, this ETF provides investors with access to a diversified group of large-cap growth stocks. It tracks the CRSP US Large Cap Growth Index, using factors such as historical growth in earnings per share and sales per share to select stocks. The fund has a strong focus on technology stocks, with Apple, Microsoft, and Nvidia among its top holdings.
• SPDR S&P 600 Small Cap Growth ETF: This ETF offers exposure to small-cap growth stocks within the S&P Small Cap 600 Index. It tracks the performance of the S&P Small Cap 600 Growth Index, focusing on stocks with robust growth characteristics. The fund has a low expense ratio of 0.15% and an annual total return of 7% since its inception in September 2000.
• Global X Lithium & Battery Tech ETF: This ETF provides access to companies involved in the lithium cycle, from mining to battery production for electric vehicles. It has a diverse range of holdings across materials, industrials, consumer discretionary, and technology sectors. The ETF has relatively high expenses of 0.75% but offers easy access to a long-term growth trend in the electric vehicle industry.

Aggressive allocation ETFs

One example of an aggressive allocation ETF is the iShares Core Aggressive Allocation ETF (AOA), which aims to track the investment results of the S&P Target Risk Aggressive Index. This ETF is considered a fund of funds, investing primarily in underlying funds that seek investment results corresponding to their respective indexes. It generally invests at least 80% of its assets in the component securities of the underlying index, which is composed of a mix of global bonds and stocks.

It is important to note that aggressive allocation ETFs carry a higher level of risk compared to other investments. This means that while they offer the potential for high rewards, there is also a greater possibility of losing money. Therefore, investors should carefully consider their investment objectives, risk tolerance, and time horizon before investing in these types of funds.

Aggressive multi-asset ETFs

• IShares Core Aggressive Allocation ETF (AOA): This ETF offers investors a simple way to build a diversified portfolio with a broader mix of global bonds and stocks, while also harnessing the experience of BlackRock and the efficiency of iShares ETFs.
• Cambria Global Momentum ETF: This ETF is issued by Cambria Investment Management, LP, and is included in the list of Aggressive multi-asset ETFs by ETF Database.
• IShares ESG Aware Aggressive Allocation ETF: This ETF is part of the iShares family and is designed to provide a diversified portfolio with a focus on environmental, social, and governance (ESG) considerations.
• Invesco Zacks Multi-Asset Income ETF: This ETF seeks to track the investment results of the Zacks Multi-Asset Income Index and is ranked as the #2 Aggressive Allocation fund by U.S. News.
• WisdomTree U.S. Efficient Core Fund: This actively managed fund seeks to achieve total return by investing in a variety of asset classes, including stocks, bonds, and alternatives. It is ranked as the #1 Aggressive Allocation fund by U.S. News.

It is important to note that Aggressive multi-asset ETFs carry a higher level of risk compared to more conservative investment options. Investors should carefully consider their risk tolerance and investment objectives before investing in these or any other financial products.

Aggressive investment strategies

• Small and Micro-Cap Stock Investing: The aggressiveness of a portfolio depends on the relative weight of high-risk asset classes such as stocks and equities. Small-cap stocks are companies below $1 billion market value, while micro-cap stocks are companies with a market value of $250 million to $500 million. Micro-cap stocks are considered riskier but are cheaper and may have an unlimited payout.
• Options Trading: Options are contracts that allow investors to buy or sell a security for a certain price during a set period. They are often used to hedge against a decline in the stock market or for speculative purposes. Due to their leverage component, they are considered high risk.
• Foreign Stocks and Global Funds: Developing countries and emerging economies may offer higher returns but come with higher political risk. Even choosing countries with stable financial systems, investors may still face the risk of currency fluctuations.
• Private Equity Investments: This strategy allows investors to invest directly in start-ups or growing companies. It is a long-term strategy that can result in high cash returns if the business succeeds. However, if the business fails, so will the investment.
• Aggressive Growth Funds: These are professionally managed mutual funds that invest in multiple stocks and other assets that tend to deliver high returns. While these funds are well-diversified, their returns can vary from year to year.

Frequently asked questions