March has not been kind to investors over the past couple of years. Last year, a struggling economy and the specter of tariffs caused the S&P 500 (^GSPC 0.61%) to drop about 6% for the month.
This year, the S&P 500 hasn’t been on a consistently upward trajectory wither. In fact, as of last week, the index was down about 2.7% for the year amid concerns about geopolitical tensions with Iran, higher gas prices, and rising unemployment rates. These factors are exacerbated by an overvalued stock market, particularly among large caps.
Image source: Getty Images.
As we saw last year, stocks stormed back in the second half of the year after a rough March and April. Can we expect a similar pattern again this year? It is impossible to know, but investors should be looking longer term, beyond the short-term volatility.
And with a longer-term view, investors may find this dip a good opportunity to buy an exchange-traded fund (ETF) that is built for growth and is made up of stocks that are at attractive valuations.
That’s why investors may want to consider an ETF that focuses on growth at a reasonable price (GARP) stocks, particularly the iShares MSCI USA Quality GARP ETF (GARP 0.71%).
Growth, value, and quality
The iShares MSCI USA Quality GARP ETF is a smart investment right now because it has the capacity for long-term growth, but weeds out overvalued stocks that might be more prone to steep losses during periods of sharp volatility.
The GARP ETF tracks the MSCI USA Quality GARP Index, which contains both large- and mid-cap growth stocks that meet certain value and quality screens.
Today’s Change
(-0.71%) $-0.47
Current Price
$65.73
Key Data Points
Day’s Range
$65.63 – $66.92
52wk Range
$43.02 – $71.50
Volume
195K
The screens seek to ensure that the index, and the ETF by extension, includes stocks that are reasonably priced with long-term growth potential.
The stocks in the index are weighted by a proprietary system that develops a score based on market cap, growth characteristics, value, and quality.
The ETF currently holds 147 stocks, and the largest five holdings are Meta Platforms, Microsoft, Nvidia, Apple, and semiconductor equipment manufacturer Lam Research.
A history of beating the S&P 500
This ETF has consistently outperformed the S&P 500 over time, as well as the Russell 1000.
Over the past 12 months, it has returned 32%, compared to returns of around 21.5% for both the S&P 500 and the Russell 1000.
Over the past five years, it has had an average annualized return of 16% compared to 11.5% for the S&P 500 and 10.7% for the Russell 1000.
With markets being volatile, investors should focus on getting good, quality, long-term stocks that are reasonably cheap — and this ETF has consistently delivered that for investors.
