Growth Investing
Strategies for Growth-Focused Clients
Growth is simply the goal of seeing your initial capital appreciate over the long term—your financial plan identifies your objectives and how you’ll attain them, and your investment portfolio puts them within reach.
Different asset classes, industry sectors, and individual securities have distinct risk-return profiles. An investor’s asset mix—fixed income, stocks, and alternatives—is the most important factor in balancing risk and opportunity.
Defining Goals
Personalizing Growth
Whether you’re building wealth for a future milestone or looking to maximize long-term returns, your investment strategy should be completely customized to fit your needs. By aligning your investments with your personal objectives, you can pursue growth in a way that’s both intentional and sustainable—even through market ups and downs.
Most investment strategies will face challenges on the way to realizing their full value, which can lead to heightened volatility and the need to “personalize” what growth means to you. The first steps to managing expectations and outcomes are clearly articulating your goal, when you want to reach it, and what risks you’re willing to take along the way.
If your aim is to grow your wealth, the real question becomes what you hope to achieve with it.
By clearly defining what “wealth” means to you—paying for your children’s education, donating to charity, purchasing investment properties, or saving for retirement—you can structure your portfolio around reaching a specific target rather than the broad definition of growth.
Your time horizon plays a key role in how your portfolio is built. High-potential investment opportunities often take time to mature and may experience short-term underperformance along the way.
When investing in stocks, working with a 5- to 10-year commitment can help mitigate the risk of loss. Investing on a timeline of when you’ll need your funds helps preserve capital in the pursuit of growth.
Stocks traditionally carry greater short-term risk than fixed income securities, as they can be pressured by economic sensitivity, interest rates, investor sentiment, and more, leading to periods of acute volatility.
Understanding your appetite for risk—and adjusting your asset mix accordingly—helps you stay on track without taking on more stress or uncertainty than you’re comfortable with.
Thorough Diversification
Sustainable Growth
Our industry tends to prioritize returns at the cost of underestimating potential risks. Our portfolio managers give as much—and sometimes more—attention to potential risks as to returns. We tactically adjust our asset mix to reduce risk and position ourselves to capture emerging opportunities.
Investors who allocate the bulk of their wealth to a single company, sector, or asset class leave their portfolio reliant on the complex, interconnected market dynamics all working in their favour. Concentration risk, the opposite of diversification, could result in significant losses at any time.
While global diversification is an essential risk management tool for income-oriented investors, it is even more important for growth investing that takes on greater risk—especially in the short term, as it adds downside protection without compromising opportunity.
Although stocks have historically delivered higher returns, there are times when fixed income investments are more appealing—as shock absorbers in turbulent markets, they’re essential for even the most growth-oriented investors.
An important concept to practice is rebalancing, which is essentially adjusting how your investment capital is deployed across—and within—various asset classes. Doing so regularly can ensure your portfolio is optimized for shifting market conditions.
Investments in various countries may perform quite differently at times depending on where they are in their respective economic cycles or how they are impacted by changes to geopolitical factors such as local legislation and regulations.
Investing globally broadens an investor’s opportunity set—you’re active in the mature economies of North America and Europe, as well as emerging ones such as China, India, and other markets where rapid economic expansion or groundbreaking innovation is underway.
Certain sectors are known for cyclical growth and are heavily dependent on economic activity, whereas other sectors are less susceptible to a potential slowdown. Portfolios with broad sector diversification are well suited for full-cycle performance.
In a roaring economy, innovative technology and emerging trends can offer high growth potential. In less ideal conditions, sectors that are considered more defensive, like utilities, could be the more rewarding investment.
Most retail investors are limited to public market securities, where unpredictable investor sentiment heavily influences performance. On the other hand, investing in various alternatives, such as private credit, real estate, infrastructure, and private equity, can offer attractive returns and portfolio stability during public market volatility.
The issue is that these sophisticated products are often reserved for institutional investors, and not many people can access them—thanks to our scale and reputation, Bellwether clients can.
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Bellwether Growth Strategies
All-Weather Performance
While an investor’s asset mix, or specifically their allocation to stocks, is the most important variable in defining their bias toward growth or income, the underlying investment strategy also plays a role. There are various investment philosophies and strategies for equity investors to choose from, but all have different return and risk profiles.
Investors must decide which approach is best suited to meet not only their growth objectives, but also their tolerance for risk or short-term volatility. One of Bellwether’s core goals is to keep our clients invested throughout an entire market cycle by offering a smoother ride—this is essential to achieving long-term success for any investor.
Our core belief is that companies that have consistently grown their profits and increased their dividends inevitably produce above-average returns with lower volatility. We see this kind of track record as a sign that their business model can produce sustainable profits—and that’s precisely the kind of company you want to be invested in for the long run. These corporations exhibit expert management, impressive resilience, inherent reliability, and balance sheets that enable a pathway to success. As a total return strategy, this considers both share price appreciation as well as the income generated from dividends along the way.
Our “core-satellite” portfolio, based on Bellwether’s proprietary algorithm, pairs broad exposure to the largest global indices with an actively managed component that tactically emphasizes specific industry sectors or geographic regions. When equity markets are advancing, the portfolio targets ETFs that are exhibiting short-term price momentum. By design, the portfolio tactically rotates into more defensive ETFs as markets correct and also reduces overall equity exposure in the event of a significant downturn. This strategy is suited to investors who prioritize short-term relative returns and are comfortable with temporary volatility.
Investors should consider allocating a portion of their portfolio to this unique asset class, which has historically demonstrated the highest annualized returns. From unproven start-ups to multinational corporations, there’s a wide range of private companies to invest in. Smaller companies typically carry more risk, whereas larger ones offer less return potential. However, the surprisingly underserved middle market—focusing generally on companies valued between $100M and $500M—is particularly compelling, given its superior risk-return profile relative to other market segments.
Portfolio Construction
Tailored Solutions
Our solutions offer an efficient way to diversify your investments across multiple asset classes in both the public and private markets.
By adjusting the relative weighting of each fund or strategy, your portfolio can better match your growth ambitions.
Most, if not all, portfolios should include an income and capital appreciation component. What’s important is identifying the right balance for you based on your needs and preferences.
Prudent Growth
A smoother ride to the top for long-term, sustainable growth.
Discretionary Management
Actively optimizing your portfolio across various market conditions.
True Diversification
Reducing volatility to protect and compound your wealth.
Our clients expect more than traditional asset management; we craft truly personalized growth strategies that align with your unique goals, expectations, time horizons, and risk profile. From there, our team actively reviews and adjusts your portfolio to ensure your wealth and evolving needs are all in balance with market conditions.
This personalized investment strategy is a core part of your overall financial plan with Bellwether, designed to provide not just growth, but also the confidence of knowing that the wealth you’re building is protected as well.
Common Growth Investing Mistakes
What to Avoid
Impulsive Reactions
Your long-term goals shouldn’t be overshadowed by short-term volatility—stick to your plan and avoid emotional investment decisions.
Concentration Risk
Relying on one asset class, sector, or region is risky—by diversifying your holdings and opportunities, you can equalize risk distribution.
Downplaying Income
Income can be reinvested for compounding growth—it can also make sure you’re “paid to wait” for your overall portfolio to grow in value.
Hindsight Bias
The past should inform, but not dictate, how you invest—relying on previous events and assuming they’ll repeat themselves might obscure emerging or present opportunities.
Idle Investing
If your circumstances change, your strategy should be ready to do the same—rebalance regularly to optimize your portfolio for different personal or market conditions.
DIY Approach
Your portfolio should complement, and not complicate, your lifestyle—our team can help you focus on what matters by managing your portfolio with expertise and attention to detail.
Growth Investing FAQs
Answering Investor Questions
A growth investment strategy typically focuses on maximizing returns by emphasizing investments in stocks that provide a combination of capital appreciation, dividend income, or a combination of both.
Investing for growth often involves identifying companies with the potential to innovate, disrupt, and increase their market share. Participating in these opportunities is clearly a compelling pathway to long-term capital appreciation, but industry leaders aren’t created overnight and may take time to mature. Choosing growth stocks involves examining a company’s fundamentals and valuation metrics compared to historical levels and its peer group.
Growth investing tends to place a higher priority on capital appreciation by investing in companies that are likely to rapidly grow their sales, cash flows, and profitability over the coming years. Earnings growth and the potential for multiple expansion tend to drive share prices higher. Income investing is often associated with bonds and earning returns through interest payments, but investors looking for an element of income generation to complement portfolio growth are often fond of dividend-paying equities—preferably ones that are able to consistently grow their payouts to shareholders to provide an element of inflation protection.
The primary benefit of a growth investing strategy is the potential for significant capital appreciation. By investing in companies with high growth potential, investors often see their investments outperform the broader market. Additionally, growing companies typically reinvest their profits into the business, which can lead to stronger earnings, push stock prices higher, and allow investors to enjoy compound growth.
While there is potential for higher returns with growth investing, there are also inherent risks. Growth stocks may be more volatile than income-generating securities, and their share price can fall as quickly as it climbs. Understanding your personal risk tolerance is crucial.
A growth investment strategy typically focuses on maximizing returns by emphasizing investments in stocks that provide a combination of capital appreciation, dividend income, or a combination of both.
Investing for growth often involves identifying companies with the potential to innovate, disrupt, and increase their market share. Participating in these opportunities is clearly a compelling pathway to long-term capital appreciation, but industry leaders aren’t created overnight and may take time to mature. Choosing growth stocks involves examining a company’s fundamentals and valuation metrics compared to historical levels and its peer group.
Growth investing tends to place a higher priority on capital appreciation by investing in companies that are likely to rapidly grow their sales, cash flows, and profitability over the coming years. Earnings growth and the potential for multiple expansion tend to drive share prices higher. Income investing is often associated with bonds and earning returns through interest payments, but investors looking for an element of income generation to complement portfolio growth are often fond of dividend-paying equities—preferably ones that are able to consistently grow their payouts to shareholders to provide an element of inflation protection.
The primary benefit of a growth investing strategy is the potential for significant capital appreciation. By investing in companies with high growth potential, investors often see their investments outperform the broader market. Additionally, growing companies typically reinvest their profits into the business, which can lead to stronger earnings, push stock prices higher, and allow investors to enjoy compound growth.
While there is potential for higher returns with growth investing, there are also inherent risks. Growth stocks may be more volatile than income-generating securities, and their share price can fall as quickly as it climbs. Understanding your personal risk tolerance is crucial.
