(Kitco News) – As the United States grapples with stagflation, a troubling combination of stagnant growth and persistently high inflation, investors are turning to sectors that promise stability and growth. In a recent interview with Kitco News anchor Jeremy Zaffron, Ed Butowski, managing partner at Chapwood Investments, an asset management firm for high-level celebrities and athletes, asked why there is such uncertainty. It revealed why public utilities and biotechnology have become extremely important in this era.
These businesses maintain steady demand despite broad economic fluctuations due to their essential services. Mr. Butowski emphasized the attractiveness of the sector, noting that major companies have significantly improved their performance. “NextEra is performing very well…the whole sector looks very attractive,” he said. In 2023, NextEra Energy reported solid revenue growth, with net income increasing to $7.31 billion from $4.147 billion the previous year, confirming its financial health and stability.
Biotechnology: Betting on future growth
In contrast to the defensive nature of utilities, the biotechnology sector offers a high-risk, high-return situation. Butowski points to the potential of biotech stocks in a volatile interest rate environment. “Biotech companies are very large borrowers, and lower interest rates would help biotech stocks quite a bit proportionately,” he explains. He advocates investing in LABU, a leveraged ETF that aims to triple the performance of the biotech market, and is a smart strategy for those looking to grow their returns in a high-growth sector. I think there is. His strategy reflects calculated optimism, betting on policy shifts that could lower interest rates and benefit debt-heavy industries like biotech.
Why ETFs?
Exchange-traded funds (ETFs) like LABU are popular among investors for several reasons, including providing diversification, lower operating costs than mutual funds, and trading flexibility similar to stocks. In volatile sectors like biotechnology, ETFs allow investors to gain exposure without the risk of investing in individual companies that are susceptible to market fluctuations.
If you’re interested in exploring these investment strategies further and getting more insight from Ed Butwosky, check out the full Kitco News interview above.
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