Investors used to love “story stocks”. Now they love story ETFs.
The stock of a story is not driven by earnings or assets, but by a simple and compelling narrative: a dynamic new boss, stunning technology or customers going crazy for their products. A story ETF is a publicly traded fund that invests not in an entire market or in a single sector, but in a concept or trend.
You are probably better off buying a history ETF than a history stock; at least the fund is somewhat diversified. But ETF stories carry their own risks.
Often referred to as thematic ETFs, these funds span multiple sectors, trying to capitalize on ideas like alternative energy, cloud computing or 3-D printing. Others buy stocks that could benefit as more people work from home, demand gender or racial diversity, or spend money on their pets.
The assets of these funds have grown an average of 45% a year for the past three years, says William Baun, of the Fuse Research Network in Needham, Massachusetts.