Growth factor

Growth factor ETFs invest in shares or other assets with an emphasis on finding and holding those with a history of growth.

For example, the hypothetical “ABC Growth ETF” would use a set of rules with the aim of finding shares which are expected to grow their profits or cashflow quicker-than-average. In this way, they are often considered the opposite of income-focused ETFs, which try to buy shares that distribute regular dividend income.

You should carefully study the rules used to determine which shares are — and are not — considered growth shares. You may be leaving something on the table by focusing too much on growth.