Investors loved “story stocks.” Now they love ETFs with stories.
A story inventory is not driven by income or assets, but by a simple, compelling story: a dynamic new boss, dazzling technology or customers going for their products. A Story ETF is an exchange-traded fund that does not invest in an entire market or single sector, but rather in a concept or trend.
You are probably better off buying an ETF with a story than a stock with a story; the fund is at least somewhat diversified. But story ETFs carry their own risks.
Often referred to as thematic ETFs, these funds traverse industries trying to capitalize on ideas such as alternative energy, cloud computing or 3D printing. Others buy stocks that can benefit if more people work from home, demand gender or racial diversity, or spend money on their pets.
The assets in these funds have grown an average of 45% per year for the past three years, says William Baun of Fuse Research Network in Needham, Massachusetts.