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The best funds for aggressive investors is our topic for today. An aggressive investing strategy typically seeks returns that are greater than those offered by the broader stock market, such as the S&P 500 index.
Thus an aggressive growth portfolio can be a lucrative way to generate significant returns. However, it also comes with higher risk and can lead to substantial volatility as well as losses, especially in the short run, compared to more conservative strategies.
Investing in exchange-traded funds (ETFs) that follow an aggressive growth strategy can help mitigate some of this volatility by offering diversification. In general, managers of aggressive funds have a high-conviction approach and emphasize shares that are growing fast. These stocks may have higher profit potential, sustainable earnings and cash flow growth.
Meanwhile, the recent market turmoil has created plenty of exciting buying opportunities, especially in many robust technology stocks, and funds that invest in them.
With that information, here are three of the best ETFs for aggressive investors looking to leverage some upside when the extreme volatility pans out.
Best Funds for Aggressive Investors: Global X Cybersecurity ETF (BUG)
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52-Week Range: $23.51-$35.10
Dividend Yield: 0.35%
Expense Ratio: 0.50% per year
The increased digital transformation worldwide has led to significant levels of investment in internet security solutions. According to Fortune Business Insights, the global cybersecurity market should exceed $375 billion in 2029, up from $139.8 billion in 2021. Such an expansion would mean a compound annual growth rate (CAGR) of close to 13.5%.
Therefore, first up on today’s list of ETFs for aggressive investors is the Global X Cybersecurity ETF (NASDAQ:BUG), which provides exposure to global cybersecurity shares. The fund was first listed in October 2019.
BUG tracks the market-cap weighted Indxx Cybersecurity Index and currently has 29 holdings. The top 10 stocks in the fund comprise well over half of net assets of $1.3 billion.
More than two-thirds of the companies come from the U.S. Next in line are businesses from Israel (13.1%), the U.K. (8.4%), and Japan (6.2%). Among the leading names are CrowdStrike (NASDAQ:CRWD), Check Point Software Technologies (NASDAQ:CHKP), Avast (OTCMKTS:AVASF), Palo Alto Networks (NASDAQ:PANW), and Okta (NASDAQ:OKTA).
BUG has declined nearly 8% over the past 12 months and over 14% since January. By comparison, the Nasdaq 100 index has lost about 17% of its value year-to-date (YTD). Investors who expect the cybersecurity sector will remain a red-hot niche of the tech industry can consider buying in BUG around these levels.
Invesco S&P 500 Equal Weight Technology ETF (RYT)
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52-Week Range: $227.97 – $327.81
Dividend Yield: 0.60%
Expense Ratio: 0.40% per year
The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) gives access to the information technology sector of the S&P 500 index. The fund started trading in November 2006.
RYT holds 77 stocks and the top 10 comprise around 15% of net assets of $2.2 billion. Sectoral allocations include semiconductors & semiconductor equipment (26.5%), IT services (24.6%), software (24.4%), and electronic equipment, instruments & components (10.5%).
Global energy technology name Enphase Energy (NASDAQ:ENPH); digital transformation services provider Epam Systems (NYSE:EPAM); cloud networking solutions supplier Arista Networks (NYSE:ANET); Paycom Software (NYSE:PAYC), provider of cloud-based human capital management solutions delivered as software-as-a-service (SaaS); and semiconductor firm Monolithic Power Systems (NASDAQ:MPWR) lead the names on the roster.
RYT saw a record high on Dec. 30, 2021. However, it has dropped 17% since the beginning of the year and hit a 52-week low on June 16.
Trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 17.16x and 5.18x, respectively. Interested readers whose long-term portfolios can handle short-term volatility could consider investing in RYT now.
Best Funds for Aggressive Investors: VanEck Biotech ETF (BBH)
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52-Week Range: $131.12 – $222.22
Dividend Yield: 0.25%
Expense Ratio: 0.35% per year
The biotech industry is often considered risky and speculative, but growth opportunities cannot be underestimated. Disruptive technologies such as machine learning and artificial intelligence also help drive successful biotech innovations and, thus, potentially above-average returns.
Our last fund for today, the VanEck Biotech ETF (NASDAQ:BBH), offers a concentrated approach to the global biotech companies that use biological processes to create new pharmaceuticals or therapies. It was first listed in December 2011.
The thematic ETF tracks the MVIS US Listed Biotech 25 Index. It currently has 25 stocks, where the leading 10 names comprise close to two-thirds of $489.5 million in net assets.
Around 85% of the stocks come from the U.S. Next are biotechnology names from Ireland, Germany, China, and Switzerland. Among them Amgen (NASDAQ:AMGN), Gilead Sciences (NASDAQ:GILD), Vertex Pharmaceuticals (NASDAQ:VRTX), Moderna (NASDAQ:MRNA), and Regeneron Pharmaceuticals (NASDAQ:REGN).
BBH is down 15.5% YTD and over 27% in the past 12 months. Trailing P/E and P/B ratios are 13.56x and 4.77x. We believe the decline in BBH so far in 2022 offers a good opportunity to buy into these leading biotech stocks.
On the date of publication, Tezcan Gecgil, Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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