TIME TO RETHINK GROWTH

Not all growth stocks are equal

During periods of trending markets, like strong rallies or steep selloffs, stocks often move in unison. From March 2020 to October 2021, a rising tide broadly lifted growth stocks. During this period, the NASDAQ 100 Index returned 105%, and over half of the underlying stocks returning more than 90%.¹ When markets flipped in 2022, they sold off together. The NASDAQ 100 Index pulled back 32%, and more than half of the stocks in the index were down by more than 30% YTD.²

In 2023, the markets may not find such a clear direction as higher interest rates and deglobalization take us into unfamiliar territory. At the same time, 2022’s selloff across growth stocks may lure bargain hunters back into the market. And finally, economic weakness and persistent inflation are likely to have unequal impacts on various segments of the economy.

The bottom line: what worked in the past may not be the path to success in 2023. Investors may want to consider looking beyond broad exposure to tech or growth stocks to isolate slices of the market that have both near-term and long-term appeal. In our 2023 outlook, we highlight three segments that we believe could be well-suited for this environment.

iShares Megatrend ETFs allow investors to harness exponential themes via diversified, transparent and cost-effective ETFs.

Owning one company, geography or industry — even the technology sector itself – can miss the broader trend of exponential change. Owning a targeted basket of securities poised to benefit from the emergence of a theme, regardless of sector or geography, can help solve this challenge for investors.

All of this comes together across iShares index ETFs that allow investors to capture stocks across the value chain of a particular theme — a do-it-yourself-approach — and in BlackRock active ETFs that allow portfolio managers to hand-pick companies and rotate across multiple themes and segments of a value chain — a do-it-for-me approach.

It may be hard to predict the pace of change ahead — or its implications. But BlackRock is here to help by delivering investor choice and progress to make it ever easier for all investors to purchase their very own share of the future.