Investing for growth in an expanding economy

 

Invest in sectors likely to outperform as the economy expands

According to business cycle theory, periods of economic stagnation are typically followed by rapid and often unpredictable periods of economic expansion. Identifying opportunities requires research, ingenuity, and the ability to think ahead. E*TRADE can provide you with the resources you need to identify these possible growth sectors, so you can take advantage of them for your portfolio
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Consumer cyclical funds

Consumer cyclical funds seek capital appreciation by investing in equity securities of U.S. or non-U.S. companies that provide consumer products or services that tend to sell well during periods of economic expansion (automobiles, airlines, furniture, hotels, etc.).
 

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Diversified emerging markets funds

Diversified emerging markets funds tend to divide their assets among 20 or more nations, although they tend to focus on the emerging markets of Asia and Latin America rather than on those of the Middle East, Africa, or Europe. These funds invest predominantly in emerging market equities, but some funds also invest in both equities and fixed income investments from emerging markets.
 

Mutual Funds

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Financial funds

Financial funds seek capital appreciation by investing primarily in equity securities of U.S. or non-U.S. financial services companies, including banks, brokerage firms, insurance companies, and consumer credit providers.
 

Mutual Funds

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Industrial funds

Industrial funds seek capital appreciation by investing in equity securities of U.S. or non-U.S. companies that are engaged in services related to cyclical industries. This includes, but is not limited to, companies in aerospace and defense, automotive, chemicals, construction, environmental services, machinery, paper, and transportation.
 

Mutual Funds

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Large-cap growth funds

Large-cap growth funds invest primarily in big U.S. companies that are projected to grow faster than their peers. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price-earnings ratios and low dividend yields). Most of these funds focus on companies in rapidly expanding industries.
 

Mutual Funds

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ETFs

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Mid-cap growth funds

Mid-cap growth funds target U.S. firms that are projected to grow faster than their peers, therefore commanding relatively higher prices. The U.S. mid-cap range for market capitalization typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price-earnings ratios and low dividend yields).
 

Mutual Funds

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ETFs

Data as of ET
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Small-cap growth funds

Small-cap growth funds focus on faster-growing companies whose shares are at the lower end of the market-capitalization range. These funds tend to favor companies in up-and-coming industries or young firms in their early growth stages. Because these businesses are fast-growing and often richly valued, their stocks tend to be volatile. Stocks in the bottom 10% of the capitalization of the U.S. equity market are defined as small cap. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price-earnings ratios and low dividend yields).
 

Mutual Funds

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Technology funds

Technology funds buy stocks of high-tech businesses in the U.S. or outside of the U.S. Most concentrate on computer, semiconductor, software, networking, and Internet stocks. A few also buy medical device and biotechnology stocks, and some concentrate on a single technology industry.
 

Mutual Funds

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ETFs

Data as of ET
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Fund selection criteria: The funds displayed are not a recommendation by E*TRADE Securities or its affiliates to buy, sell or hold any security, financial product or instrument nor is it an endorsement of any specific security, company, fund family, product or service. All screens display funds within the respective category and group. All mutual fund screens exclude funds not open to new investors, exclude funds that have expense ratios greater than 2% and only include NLNTF mutual funds with initial investment minimums of $5,000 or less. All ETF screens exclude exchange traded notes and leveraged ETFs. The top performing funds, based on 3 Year total return, within the various category screens are shown in the initial display along with the all the NLNTF All-Star funds of the corresponding category. All funds in the initial display are ranked by 3 Year total return.

All mutual fund screens exclude funds not open to new investors and only include mutual funds with initial investment minimum less than $5,000. All ETF screens exclude exchange traded notes and leveraged ETFs.

All funds within the respective group can be seen by clicking on the hyperlinked / button section in the phrase "X of X results," "See more Mutual Funds," or "See more ETFs."

International investing carries certain risks that can be different from the risks of U.S. investments. These risks can include political or economical instability, changing currency rates, foreign taxes, reduced liquidity (difficulty selling securities held by a fund) and different regulatory or financial accounting standards.

Non-diversified investment in a significant portion of assets in one sector, issuer, geographical area or industry, or in related industries, may involve greater risks, including greater potential for volatility, than more diversified portfolios.

There are risks associated with certain industries or companies within an industry. This could cause performance to be susceptible to the economic, business, government regulation, or other developments that affect those industries.

Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems that can be expected to have less stability than those of more developed countries. These securities may be less liquid and more volatile than investments in U.S. and longer-established non-U.S. markets.

Investments in mid- and small-cap companies typically have higher risk characteristics than large cap stocks and may be subject to greater price fluctuations than large-cap stocks.

The focus on technology-related securities increases exposure to the risks associated with the technology-related sector, including changes in laws or regulations, lawsuits and regulatory proceedings, patent considerations, intense competition and rapid technological change and the potential for undesirability.

You can invest in the mutual funds available through E*TRADE Securities’ no-load, no-transaction fee program (NTF) without paying loads, transaction fees, or commissions. To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no transaction fee funds that are held less than 90 days. Direxion (other than the commodity Trends Strategy Fund DXCTX), ProFunds, Rydex mutual funds and all money market funds will not be subject to the Early Redemption Fee. All fees and expenses as described in the fund's prospectus still apply. Please read the fund's prospectus carefully before investing.

You can buy and sell the exchange-traded funds (ETFs) available through the E*TRADE Securities commission-free (CF) ETF program without paying brokerage commissions. For margin customers, the ETFs purchased through the program are not margin eligible for 30 days from the purchase date. To discourage short-term trading, E*TRADE Securities may charge a short-term trading fee on sales of participating ETFs held less than 30 days.

The Morningstar RatingTM for funds is calculated for management investment company products registered under the Investment Company Act of 1940 (including mutual funds, exchange-traded funds and closed-end funds) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are analyzed as a single product category for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

The All-Star List is a quarterly list of leading funds and ETFs selected by E*TRADE Capital Management, LLC. Funds selected for the All-Star List are selected from the no-load mutual funds offered through E*TRADE Securities.

All-Star Funds typically have at least a three year track record and compare favorably against their peers based on historical return, risk, expenses, manager tenure, performance and style consistency, asset size and growth and must be 1) structured through sound investment philosophy and process, 2) implemented with acceptable level of investment risk management strategy and 3) supported by a reputable investment firm. To view the fund's Report Card with additional performance metrics, including standardized quarterly results, please click on the fund name.

Expense ratios are provided by Morningstar and are based on information obtained from the ETFs last audited financial statement. Current expense ratios for the ETFs may be different.

Yield is a measure of the fund's income distributions, as a percentage of the fund price. Morningstar calculates this figure by summing the income distributions over the trailing 12 months and dividing that by the sum of the last month's ending NAV plus any capital gains distributed over the 12-month period.

For a definition of terms, please click on the Data Definitions link. Data definitions provided by Morningstar.

Quotes may be delayed by at least 15 minutes. Quotes and other information supplied by independent providers identified on the E*TRADE vendor disclosures page

Data provided by Morningstar, Inc.

International Exchange-Traded Funds and mutual funds offer an easy way to participate in foreign markets. They generally provide broad diversification and will handle complicated issues, such as foreign tax payments and currency conversions, on behalf of investors.

Investing in an Expanding Economy

A white paper from E*TRADE Capital Management