Innovation and rapid growth are two qualities that investors crave. Apple’s innovation with the iPhone and Facebook’s legendary growth embody these qualities as well as any company over the last 15 years. The explosive stock returns for both companies certainly reflect their success. Who wouldn’t be interested in an ETF that targets the most innovative and fastest-growing companies for the next 15 years? That’s the general idea behind Advisor Shares’s “New Tech and Media” ETF (ticker: FNG).
India has nearly quadruple the population of the US. It’s the only trillion-dollar economy to also rank in the top five fastest-growing economies. Per capita income has increased five-fold since 1981. The country is expected to be the third largest consumer market by 2025. The bull case for India is obvious, and one way to capitalize is by investing in VanEck’s India Small-Cap ETF (ticker: SCIF).
Let’s take a look at YTD performance for these two investments:
I’d never advocate for judging an investment based on a short time horizon such as YTD, but when global stocks are up 15% and your investments are down 30%, it’s difficult not to notice. But the point of this post isn’t to dunk on different strategies. The point is that when it comes to investing, be wary of a good story.
- Active managers sell the story that they can consistently pick the best stocks.
- Permabears cherry-pick fear-inducing data to sell a story of impending doom (and of course the product that insulates you from said doom.)
- Annuity sales pitches sound like a mad lib where the salesman shoehorns the words “guarantee” and “protection” in as many times as possible to sell a story of security.
- Many banks create and sell complex proprietary “structured products” that offer upside return potential with seemingly no downside – that story sounds pretty good, right?
- None of the people who fell victim to Bernie Madoff did so because they valued the transparency of his process; they bought because he was a salesman with a compelling story of consistent double-digit returns and no risk.
Think of the trillions of dollars across the globe that are currently invested. The sheer size of the investment industry leads to an endless variety of strategies, designed by very intelligent people, sold with truly compelling stories. Before you buy the story, do the work to understand the underlying investment strategy and associated risk. If you can’t understand the investment, ask yourself if your advisor has your best interest at heart.
Disclaimer: Truepoint Wealth Counsel is a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A & Form CRS filed with the SEC, can be found at TruepointWealth.com. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice.