Growth stocks are for the good times. They tend to outperform during economic boom times - but during periods of heightened uncertainty, like the one we're in now, they tend to lose some appeal amid declining risk appetites. With interest rates stubbornly high, geopolitical tensions elevated, and bond yields hitting multi-year peaks, many growth stocks have pulled back substantially from their 2023 highs.
For example, the Vanguard Growth ETF (VUG) - the largest growth-focused fund by assets under management - has rallied 23% year-to-date, which surpasses the broader market's performance. However, the ETF is down 7.8% since its mid-July, and has underperformed the market despite positive inflows over this period.
