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Courtesy of: Juan Ocanas, Financial Advisor at Morgan Stanley
When you invest in a mutual fund or exchange traded fund (ETF), you’ll get information about the particular fund’s investment strategy or style. An investment strategy is simply a set of guiding principles a fund manager uses to choose the particular stock or bonds in which they’ll invest.
Two well-regarded strategies are growth investing and value investing. Each approach has definite financial advantages. However, the two investing styles can also complement each other fairly nicely. As a result, one way to diversify your portfolio might be to invest in both growth-and value-based funds, or in funds that combine the two investment styles.
Growth- or value-oriented funds typically include the words “growth” or “value” in their names. Funds that combine the two styles are “blended” funds and may include that term in their names.
Here’s what you need to know about growth and value investing strategies.
What is growth investing?
This strategy primarily focuses on investing money into what are known as “growth” stocks. Often, growth stocks are found in industries such as technology. These equities are:
• Expected to grow at a faster pace than the overall market
• More focused on reinvesting profit to grow the company instead of paying dividends
• Generally in industry groups most associated with the potential to succeed from the development of new and transformational products or services
Growth stocks also tend to be:
• More expensive than peers within an industry group and/or the broader market
• A bit more volatile (risky) than the average stock
What is value investing?
Fund managers or investors who follow this strategy focus on putting money into “value” stocks. Value stocks generally trade at a discount relative to an investor’s interpretation of fair value and may include companies in slower-growing industries.
Disclosures
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.
Juan Ocanas is a Financial Advisor in Naples at Morgan Stanley
Smith Barney LLC (“Morgan Stanley”). He can be reached by
email at Juan.Ocanas@MorganStanley.com or by telephone at
(239) 449-7853. His website is https://advisor.morganstanley.com/the-calleja-group
This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Growth investing does not guarantee a profit or eliminate risk. The stocks of these companies can have relatively high valuations. Because of these high valuations, an investment in a growth stock can be more risky than an investment in a company with more modest growth expectations.
Value investing involves the risk that the market may not recognize that securities are undervalued and they may not appreciate as anticipated.
Investors should carefully consider the investment objectives, risks, charges and expenses of a Mutual Fund and an Exchange Traded Fund (ETF) before investing. The prospectus contains this and other information about the Mutual Fund and ETF. To obtain a prospectus, contact your Financial Advisor or visit the Mutual Fund and ETF
company’s website. Please read the prospectus carefully before investing.
Juan Ocanas may only transact business, follow-up with individualized responses, or render personalized investment advice for
compensation, in states where he is registered or excluded or exempted from registration, https://advisor.morganstanley.com/
the-calleja-group
© 2021 Morgan Stanley Smith Barney LLC.
Member SIPC. CRC# 3940765 12/2021
Juan Ocanas, CRPC®
First Vice President
Senior Portfolio Manager
Family Wealth Advisor
Financial Planning Specialist
Financial Advisor
NMLS 641775
Morgan Stanley Naples Branch
(239) 449-7853
advisor.morganstanley.com/the-calleja-group
