Investing Ideas

Navigating a sell-off in growth equities

Asset class, sector, and factor diversification may offset volatility for growth stocks.

By: Darby Nielson Vino Ravichandran Mayank Goradia Nicolas Brunetti

Updated: 8/7/2024

Key Insights

The recent equity market sell-off has been sharp, marked by a historic rise in volatility, which has led to the second worst monthly performance for growth stocks versus the broader market in the past 10 years.
This has come amid elevated growth allocations, based on Fidelity data collected via portfolio construction consultation.
In past equity sell-offs, relative returns for large cap value stocks, managed futures, and real estate investment trusts, as well as macro and equity-market-neutral strategies, have helped to counter growth stock underperformance.
In the 10 worst months for growth equities, stocks in the energy, financials, consumer staples, and industrials sectors have outperformed versus the broader market; meanwhile, dividend yield as a factor has also provided diversification.
Fidelity has created a list of specific funds that have produced relatively stronger mean returns versus the growth equity index in periods in which growth has underperformed. This list can be shared with advisors.

Get the full white paper

Navigating a sell-off in growth equities

Next steps to consider

Domestic Equity

Target your clients’ investment needs with our broad lineup of domestic equity solutions.

Learn more

Sector Industry

Sector/Industry

Target specific segments of the economy with our full spectrum of sector funds, ETFs, and other solutions.

Learn more

Factor Investing

Help your clients’ investments achieve more precise exposure with our strategic factor-based investing approach.

Learn more

Diversification does not ensure a profit or guarantee against a loss.

1159448.1.0

7122386CCE3F4FACB43DA17900D6FA9F

Past performance is no guarantee of future results.

Information provided in, and presentation of, this document are for informational and educational purposes only and are not a recommendation to take any particular action, or any action at all, nor an offer or solicitation to buy or sell any securities or services presented. It is not investment advice. Fidelity does not provide legal or tax advice.

Before making any investment decisions, you should consult with your own professional advisers and take into account all of the particular facts and circumstances of your individual situation. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in these materials because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and /or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.

Registered investment products (including mutual funds and ETFs) and collective investment trusts managed by Fidelity Management Trust Company (FMTC) are offered by Fidelity Distributors Company LLC (FDC LLC), a registered broker-dealer. Fidelity Institutional Asset Management (FIAM) investment management services and products are managed by the Fidelity Investments companies of FIAM LLC, a U.S. registered investment adviser, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. FIAM products and services may be presented by FDC LLC, a non-exclusive financial intermediary affiliated with FIAM and compensated for such services.

Before investing have your client consider the funds', variable investment products', exchange-traded products', or 529 Plans' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or a summary prospectus, if available, or offering statement containing this information. Have your client read it carefully.

The use of the term "advisor(s)" throughout this site shall refer to both investment advisors and broker dealers as a collective term.