FTSE 100 defence giants BAE Systems and Rolls-Royce are rocketing right now, and so are their medium-sized FTSE 250 counterparts.

Investors know why, unless they’ve been avoiding the news altogether. I wouldn’t blame them if they had.

Geopolitics may be deteriorating but my portfolio’s thriving, with BAE and Rolls up over 30% in the last month. FTSE 250 defence tech firm Chemring Group (LSE: CHG) isn’t far behind.

Its shares are up 25% over the month, including a 7.3% jump yesterday (3 March), as markets digested the tense exchange between President Trump and Ukrainian President Zelensky on Friday (28 February).

The Chemring share price is red hot

European NATO members are now considering increasing defence spending to 3% or even 3.5% of GDP. This bodes well for companies like Chemring, which specialise in military tech and services.

Yet the Chemring share price was rising even before that, thanks to a $1.39bn takeover bid by US firm Bain Capital. While such news excites investors, I’m always cautious with takeovers, as shares can tumble if deals collapse.

I’m especially wary now, with speculation that PM Sir Keir Starmer might block foreign takeovers of UK defence firms, even from the US, on national security grounds. If he does –and Trump won’t like it – Chemring’s share price could lose some heat.

That’s less of a concern with my blue-chip defence stocks. No foreign concern is buying them (I hope). Still, an investor who put £10,000 into Chemring a month ago will be pleased. Their investment’s now worth £12,500, and given global tensions, there may be more to come.

In December, Chemring reported an 8% rise in revenues to £510m, though pre-tax profits dipped 2% to £66m. Its order book hit a record £1.037bn, indicating strong demand.

Investors are getting a share buyback too

Last month, Chemring reported that its order book had climbed again, to a record £1.35bn by 30 January. Q1 orders totalled £393m, thanks to “significant” contract wins. CEO Michael Ord cited “strong customer demand and confidence” and announced a £40m share buyback.

Over the past year, Chemring shares have risen just 13%, suggesting they were idling before the recent surge. BAE Systems was similar. My take? Defence stocks were overvalued, and investors held back. Until the Trump-Zelensky stand-off.

Over five years, Chemring shares have gained 60%, showing steady growth. Analysts remain positive, setting a median one-year target of 466p. That implies a 16% rise from current levels. However, these forecasts are likely to have predated the Zelensky shock and NATO response, so could now be higher.

Chemring looks worth considering. But if geopolitical tensions ease, the sector could cool. Even a vaguely acceptable Ukraine peace deal might dent its momentum. And a few words from Trump could send the stock anywhere.

I was also concerned to see that operating margins recently dipped from 14.6% to 13.9%, following problems at Chemring’s Tennessee site.

Investors should brace themselves for volatility. Could US procurement of UK defence equipment fall if Starmer and Trump clash? That could possibly impact the firm.

Yet I think Chemring’s well worth considering in the days ahead. But with my BAE and Rolls-Royce holdings, I already have enough exposure to the sector.

Greggs (LSE:GRG) shares are down 8% this morning (4 March) as the FTSE 250 firm released its results for 2024. And I think there’s plenty for investors to be concerned about.

A lot of the information had already been released in the update from 9 January. But that hasn’t stopped the share price from dropping further in the wake of the announcement. 

What we already knew: slowing growth

Investors already knew 2024 had been challenging for Greggs. Sales growth came in at 11.3%, with like-for-like sales up 5.5%, but this was well short of the 19.6% and 13.7% of 2023.

On top of this, the company increased its store count by 226 units and it intends to keep opening stores in 2025. Again, however the rate of growth is expected to be slower.

In 2024, Greggs expanded its store count by just under 10%. The forecast for 2025, however, is for an increase of between 5% and 6%. 

Slowing growth in 2024 was already known about before the latest update. But the outlook for 2025 in terms of trading conditions also looks relatively weak. 

What we’ve found out: more challenges

Management reported that like-for-like sales have increased 1.9% during the first nine weeks of 2025. That’s below the rate of inflation and – I think – the biggest concern for the company. 

Roisin Currie – the firm’s Chief Executive – stated that the current environment is tough. As well as consumers dealing with cost-of-living pressures, Greggs is facing higher staffing costs.

In order to protect its reputation as offering good value to customers, the business is attempting to avoid increasing prices. But that creates pressure on margins. 

There was, however, some positive news for income investors. In line with its earnings growth in 2024, the firm increased its dividend to 69p for the full year. 

Analysis

Greggs shares have been falling since the start of 2025 and it’s not hard to see why. At the start of the year, the stock was priced for growth that hasn’t really materialised.

I suspect sales have been less resistant to inflationary pressure than some investors might have hoped. In real terms, they’ve been negative since the start of 2025. 

In the short term, the company might be able to keep moving forward by opening more stores. But it won’t be able to do this indefinitely and the expansion rate is slowing.

At some point, the stock could get to a level where it’s good value despite the limited growth. Investors need to decide for themselves where that is – I don’t think it’s here.

Foolish takeaways

Trading conditions are tough for Greggs, but I think there’s reason for optimism. It’s a tough environment for the industry as a whole and the company is the best at what it does.

I expect things to pick up for the business when the economic environment starts to improve. But that doesn’t look imminent, so I’m not in a rush to buy the stock right now. I don’t think investors should rush to consider it today either.

It’s been a miserable time for the JD Sports Fashion (LSE:JD.) share price. In October, the retailer was forecasting a profit before tax and exceptional items of £955m-£1.035bn for the year ended 1 February (FY25).

A month later, it warned that its result would be at the “lower end” of this range. And then in January — blaming a “challenging and volatile” market — it revised its estimate downwards to £915m-£935m.

As a result, its share price is currently (3 March) around 50% below its 52-week high.

Don’t panic

As a shareholder, this is obviously disappointing. But in these circumstances, I look at other companies in the same sector to see how their share prices are performing.

For example, since last March, JD Sports share price has tanked by 33%. Over the same period, Frasers Group, owner of rival Sports Direct, is down 22%, and Nike’s (NYSE: NKE) stock price has fallen by 20%. This tells me that the sector as a whole is out of favour. I can relax a bit now.

However, look at its performance over a shorter period of time and a different picture emerges.

Closer scrutiny

Since September, JD Sports and Frasers Group shares have fallen by 28% and 41%, respectively. However Nike, the world’s largest sportswear brand, has seen its stock price fall by just 2%.

This could be a sign that investors believe the company’s self-inflicted problems — namely, a lack of product innovation, unsuccessfully trying to sell more through its own stores and moving away from its sporting origins — are slowly being resolved.

Indeed, for the quarter ended 30 November, earnings per share (EPS) was $0.78, comfortably beating analysts’ expectations of $0.63.

For the four quarters to this date, EPS was $3.24. This means the stock trades on a historical price-to-earnings (P/E) ratio of 24.5, which is very low by recent standards. For most of the past five years, it’s been comfortably above 30.

Encouragingly, Nike’s new boss said the company would provide “unwavering commitment to our wholesale partners”. This can only be good news for JD Sports, which says the American sportswear giant is its number one partner worldwide. Although not confirmed, it’s believed over 50% of the British retailer’s revenue is accounted for by Nike’s products.

And this figure’s likely to be higher now that it’s bought Hibbett, which operates nearly 1,200 stores in the United States.

For the JD Sports share price to recover, I believe Nike must do better.

Back in fashion

It’s certainly trying to. Last month, the American sportswear giant announced the impending launch of a “collaborative sub-brand” with Kim Kardashian, a huge fashion influencer and the celeb behind the Skims label. The first collection of NikeSkims should arrive shortly.

It’s all part of the brand’s strategy to become more relevant to women. It follows on from its expensive SuperBowl advert celebrating iconic female athletes.

But there’s more to JD Sports than Nike. It sells numerous brands including emerging, fast-growing ones like HOKA and On Running. And yet its stock currently trades on a miserly 6.6 times forecast FY25 earnings.

This is despite the global athleisure market predicted to grow by 9.2% a year until 2034. And young people — who make up the bulk of the buyers — view sportswear as their first choice for spending their discretionary income.

Overall, I think investors looking for a long-term growth stock could consider JD Sports.

I was poring over FTSE 100 performance data when I spotted a growth stock that’s totally passed me by.

It’s up a staggering 145% over the past five years, making it one of the UK’s best blue-chip performers. The success continues, up 33% in the last year.

The company in question is online education publisher Pearson (LSE: PSON). And now I’m wishing I paid more attention to it in class.

On checking, I discovered that I last wrote about Pearson back in May 2023, in what was in a pivotal time for the stock.

ChatGPT had just exploded onto the scene, and investors were worried about the impact on Pearson. Why pay for its traditional educational resources when punters could get it all for free thanks to the miracle of AI?

This share is smashing the FTSE 100

Shares in Pearson had just plunged 15% in a single day after US rival Chegg said it had been hit hard by the rise of ChatGPT as students jumped horses. 

Pearson’s board remained steadfast though, asserting that 80% of its revenues were generated outside the education sector, and it wasn’t worried.

I was though, and decided to refrain from buying the stock while I saw how things pan out. Pearson has done fabulously without me, but it wasn’t a racing certainty. The Chegg share price has crashed 98% in five years.

Fast forward to February 28 this year and Pearson’s resilience is evident. The company’s annual results showcased a 10% increase in adjusted operating profits to £600m, with a 3% rise in underlying sales to £3.5bn. 

The board rewarded loyal investors with a £350m share buyback and a 6% hike in the final dividend to 24p per share.

Pearson has been boosted by its strategic pivot towards digital and AI-driven solutions,while expanding its partnership with Amazon Web Services (AWS) to further integrate AI into its offerings. 

It now offers children access to an AI tutor to help with their homework, plus tools to help teachers enhance lesson planning.

All of which is great. I’m happy it’s doing well. The big question is whether it’s still worth considering today.

Dividend policy is progressive

My first thought is that Pearson a bit pricey, with a price-to-earnings (P/E) ratio of almost 22. That’s fair enough though. There’s a price to pay for success.

The trailing dividend yield is a modest 1.75%, despite that recenet 6% hike. But that’s what happens when a share price rockets like this one. The growth more than makes up for it though.

The consensus among nine analysts suggests a median one-year share price target of 1,381p. If accurate, this represents a mere 2% increase from today. This aligns with my concerns that the stock’s rapid ascent may be tapering off.

It looks like I’ve missed out on most of the fireworks. I still think it’s well worth considering with a long-term view. Rather than falling victim to ChatGPT and their ilk, the board has turned AI to its advantage. But it will have to keep on its toes.

Early retirement isn’t everyone’s sole focus in life, but a lot of us would like to retire before we reach the State Pension age. And a Stocks and Shares ISA can be a big help in trying to do this.

Not having to worry about capital gains taxes is very valuable for building wealth. And avoiding taxes on dividends is great for when the time comes to use a portfolio to generate income.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Retirement income

According to the Pensions and Lifetime Savings Association (PLSA), a couple in the UK needs a combined income of £43,100 per year to retire comfortably. For a single person, it’s £31,300.

Achieving either of those figures from a Stocks and Shares ISA isn’t easy. With where the stock market is right now, I think a diversified portfolio might generate around 5% per year.

That means around £626,000 in investments is what it would take for a single person to retire and live comfortably today. But the contribution limit each year for an ISA is £20,000.

Opening a Stocks and Shares ISA and immediately earning enough to retire comfortably is unrealistic (without transferring another ISA). But there are reasons for investors to be positive.

Compounding

That seems fairly gloomy, but there are reasons for optimism. The most obvious is that the cash someone invests can earn a return each year and bring the target closer. 

Investing £20,000 per year – which isn’t to be taken lightly – at an average of 5% per year results in a portfolio worth £626,000 within 20 years. That could shorten the time to retirement considerably.

There is, however, a catch. Inflation is a constant risk and as the cost of living keeps going up, the amount needed to retire comfortably in the future may well be higher than it is now. 

Despite this, a Stocks and Shares ISA can still be a powerful asset for someone looking to retire early. But the obvious question is what they consider investing in to try and reach that goal.

An under-the-radar opportunity?

One stock that probably doesn’t get the attention it deserves is Macfarlane (LSE:MACF). This might be because it’s a packaging firm and even I can’t pretend cardboard boxes are interesting.

Given this, investors might be surprised to find the market is actually relatively crowded. And the company is up against some much bigger competitors, which creates a risk.

Macfarlane, however, finds its niche in more bespoke packaging solutions for objects that are fragile or valuable. And this creates much higher barriers to entry for potential competitors. 

Technical knowledge about materials and close relationships with its customers are advantages other companies don’t have. And these have resulted in growing margins over the last 10 years.

Dividend growth

Right now, shares in Macfarlane come with a dividend 3.5% yield. And the company recently announced an increase in its shareholder distribution, which I think is encouraging.

I’d like to reach retirement before I get to the State Pension Age in 2056. But there’s a long way to go until that’s realistic for me.

Shares like Macfarlane, though, are what I want to be invested in as I try to get there. And the tax advantages of a Stocks and Shares ISA could help me along even more.

Has Warren Buffett stopped investing? He seems to be pulling money out of the stock market left, right and centre. He’s sold billions in Bank of America shares. He’s sold tens of billions of Apple shares.

The cash position (of his firm Berkshire Hathaway) has ballooned to $334bn. That’s the kind of hoarding that would grab The Hobbit dragon Smaug’s attention.

The multi-billionaire market mogul, the ’Oracle of Omaha’, the most famous investor worldwide, has taken a big old look at the markets and gone ‘nope!’

Good times rolling

What’s going on here then? Has the stock market been performing badly? No. That’s not it. Last year’s trend of the markets smashing record highs continues in 2025 unabated. The S&P 500 broke through 6,100 in February. 

Anyone investing even a year ago is up 18%. The good times continue to roll and therein may lie the problem. Times have been a little too good. 

Buffett can boast of a chunky repertoire of famous quotes, but the most famous of all might be: “Be fearful when others are greedy, and greedy when others are fearful.” 

The basic idea is when everyone is doing one thing, do the other. Zig when they zag, as they say. American stocks have had a rapid rise. It’s got to the point where folks from all corners the world are now banking on the S&P 500 as their pension option. Has it all got a bit too much?

The sky-high valuations of US stocks suggest so. Investing in companies across the pond costs a pretty penny these days. That’s the complete opposite approach to value investing where looking for underpriced stocks is the mantra. 

One approach

Value investing, by the way, was Buffett’s modus operandi as he built his fortune, crediting much of his success to his mentor Ben Graham who popularised the idea. If Buffett’s looking for value investments today, I wouldn’t be surprised if he grimaces at American valuations that are more than a touch reminiscent of those just before the dotcom crash.

Value investing isn’t just about avoiding overpriced stocks though, it’s about finding underpriced ones too. And one place where stocks are undoubtedly at a cheap ebb is in the UK where the FTSE 100 average price-to-earnings ratio of 14 is around half that of the S&P 500. 

Take BP (LSE: BP) as one example. The oil major trades at around 10 times earnings. Compare that to US competitors like ExxonMobil at 14 times earnings, or Chevron at 16 times earnings. As far as what you’re paying for each pound (or dollar) of profit, the British firm’s cheaper. 

Is BP a buy for me? Well, there’s a lot of uncertainty around the firm at the moment. Profits fell sharply in the last year. The fall has led to activist investors getting involved and, among other things, calling for the end to its Net Zero efforts. 

Those aren’t small hurdles the company’s facing, if they can get over them smoothly then this could be an excellent value opportunity.

Not only do the shares trade at a discount to its peers but investors could buy in today for 20% less than it would have cost last year. I’d say that could be one to consider.

Games Workshop (LSE: GAW) shares keep breaking records. The FTSE 100 newbie just reached an all-time high with the shares going for a cool £145 a pop. The shares are up 50% in the last six months or so and they’ve doubled since late 2022. 

The resulting bump in market share has lifted the stock onto the FTSE 100 and made it look like one of Britain’s brightest companies. Big question then, is it a buy to consider today?

I’ll mention that I’m a shareholder. I believed the firm’s keen devotion to maintaining the strength of its branding would foster a keen devotion from its customers. This seems even more true today as we see so many other brands chasing the easy money and losing the magic they originally had. This process alienates those fans sooner or later as well.

In the mainstream?

Take Star Wars, for instance. I remember a time when a new George Lucas film was a cultural event. You could barely walk down the street without seeing magazine articles or overhearing conversations about it. 

Where is Star Wars now? After churning out a long line of uninspiring movies and drab TV series, its name’s in the gutter. A new Star Wars show called Skeleton Crew came out a month back. Jude Law was in it. Did anyone care? No one I know, at least.

The Games Workshop universes like Warhammer and Warhammer 40k might not be on the same level of Star Wars yet, but they might be heading there. 

Amazon has commissioned a new TV show starring Henry Cavill that’s rumoured to have a $20m-$30m budget an episode (Games Workshop perhaps collecting a million in royalties each episode too). 

A blockbuster video game was also released last year in the Warhammer 40k universe. 

All in all, Warhammer might be going mainstream. There’s certainly a gap in the market for it. And Games Workshop shares might rise on such success. 

The core of the business is still the tabletop games. That’s where the bulk of the revenue comes from anyway. But a focus on high-quality processes is evident there too.

It would be very easy to outsource all the production of those miniatures and paints and boxsets to China. Slash the margins, bump up the profits. We all know the playbook. 

High prices

But Games Workshop doesn’t do this. It makes it products using British workers in British factories, all located near its headquarters in Nottingham. 

This makes Warhammer an expensive hobby – a starter kit can cost £70, a single model can cost £40 – but folks buy them like hot cakes nevertheless. 

The big question of course is the valuation. The shares in quality companies don’t tend to come cheap. In Games Workshop’s case, the shares trade at 27 times earnings. About double the FTSE 100 average isn’t what I’d call a bargain. 

If supply costs rise or an economic slowdown hits then there’s room to fall there.

That said, the best companies tend to trade at high prices because, well, they’re the best companies. If Games Workshop continues to be the well-loved brand it is now then it could be an excellent buy even at this valuation.

As such, I’d say it’s one for investors to consider.

Having followed financial markets since the 1980s, I’ve witnessed four stock market crashes. My first was Black Monday — 19 October 1987 — when the Dow Jones Industrial Average shed 508 points (22.6%) overnight. Ouch.

Market meltdowns

My second major meltdown was the ‘dotcom bubble’ bursting in 2000-03. From end-1999 to 12 March 2003, the FTSE All-Share Index plummeted by 50.9%.

My third financial collapse? The global financial crisis of 2007-09. From 25 June 2007 to 3 March 2009, the FTSE All-Share Index crashed by 48.6%. Fortunately, I warned many times of this coming chaos, vastly reducing my losses during this bear market.

My fourth stock-market crash was the Covid-19 ‘flash crash’ of spring 2020. The FTSE All-Share Index slumped 37.2% from 17 January to 19 March. Having put 50% of my family fortune into cash at end-2019, I gobbled up great stocks at bargain prices during this rout.

Bubble and squeak

Discussing US stock valuations recently, a friend offered a misquoted comment from former Manchester United manager Sir Alex Ferguson. Arguing that American equities were priced for perfection, he warned this could be ‘squeaky bum time’ for global investors.

Reviewing the S&P 500, I agree. The leading US stock-market index trades on an elevated price-to-earnings ratio of 23.9 times historic earnings, well ahead of its long-term average. Also, its dividend yield of 1.3% a year is modest, reflecting American companies’ reluctance to return cash to shareholders.

In contrast, the UK’s FTSE 100 index seems cheap as chips to me. It trades on 14.7 times trailing earnings and offers a dividend yield of 3.6% a year — a useful cash stream for value and income investors, including me.

Bang or hiss?

Lacking a crystal ball, I have no idea whether the US stock market bubble — if it truly is a bubble — will burst or gently deflate. Indeed, I expect the S&P 500 to hit higher highs before financial gravity’s pull. Also, future declines might last a week, a month, a quarter, or a year. Who knows? What I do know is that buying quality stocks during bearish periods usually pays off handsomely over time.

Silicon value

Right now, the S&P 500’s valuation is inflated by the highly rated stocks of the Magnificent Seven mega-cap tech firms. In particular, Elon Musk’s carmaker Tesla and Jensen Huang’s chipmaker Nvidia trade on sky-high earnings multiples.

However, one ‘Mag 7’ member seems an outstanding value stock to me. It is Alphabet (NASDAQ: GOOG), owner of all-powerful search engine Google. After recent share price falls, Alphabet has dropped to fifth in the league table of US-listed Goliaths.

At its 52-week peak, the Alphabet share price hit an all-time high of $208.70 on 4 February. As I write, it stands at $171.75, down 17.7% in four weeks. This values this tech Titan at $2.1trn — a valuation driven down partly by a federal anti-trust investigation into its dominance in online advertising.

For me, this fall pushes this well-known stock well into ‘Silicon value’, trading on 21 times earnings with a dividend yield nearing 0.5% a year as a bonus. I’d buy big into Alphabet today, had we not bought this stock at its five-year low in November 2022. Of course, anti-trust issues and slower earnings growth could batter this stock, but we will keep tight hold of our high-performing Alphabet shares!

So how have Shell (LSE: SHEL) shares done lately? Pretty limp, comes the answer.

They’re up a modest 7% over the last 12 months. By comparison, the FTSE 100 as a whole grew 16.3% before dividends. The oil and gas giant has trailed notably in that time.

Most of the action – such as it is – has come in recent weeks. The Shell share price is up 5.5% since the start of the year. If an investor had put £10k into the stock when markets opened in January 2025, today they’d have £10,555. That’s a gain of £555, before trading charges.

When will this FTSE 100 stock get fired up?

The phrase ‘shooting the lights out’ doesn’t exactly spring to mind. However, often the best time to invest in a stock is when it looks a little underwhelming. Before the recovery, rather than afterwards. Assuming there is one.

Shell’s financial results have been mixed, reflecting the challenges of fluctuating energy prices. On 30 January, the board reported a sharp drop in adjusted earnings from $6bn in Q3 to $3.7bn in Q4. Weaker refining margins didn’t help.

Shell nonetheless generated $39.5bn of free cash flow across 2024, up from last year’s $36.5bn despite lower energy prices.

The board is also continuing its astonishing share buyback spree, paying a further $3.5bn before Q1 results. That’s the 13th consecutive quarter of at least $3bn of buybacks while cutting net debt and hiking the latest dividend by 4%.

Analysts remain cautiously optimistic. The 19 analysts offering one-year share price forecasts have produced a median target of 3,292p. If accurate, this would represent an increase of more than 23% from today. Plus, there’s a forecast dividend yield of 4.7%, nicely covered 2.5 times by earnings.

Forecasts are not guarantees and are subject to various market risks, of course.

That’s a huge share buyback, plus dividends

Brent crude oil has now retreated below $73 a barrel. While Shell can break even at much lower prices, further slippage will squeeze revenues.

If we get a peace deal in Ukraine and Russian oil production is liberated, the oil price could come crashing down. Donald Trump is urging the US to get drilling, which could increase production and sink the price. Both could harm Shell. Oil stocks are on a knife edge. They usually are.

Shell’s current valuation appears attractive. The company’s price-to-earnings (P/E) ratio stands at 8.84. This modest valuation, combined with the board’s commitment to shareholder returns and strong cash flow generation, makes it a compelling consideration for long-term investors.

There’s talk of a primary New York listing, to drive up the valuation. I’m not paying too much attention to that. It could just be speculation, or the Shell board floating it as a threat to the UK government. And when Glencore said it was looking to shift to the US, its share price actually fell.

I’ve already got exposure to the oil and gas sector, via BP. To an investor who wants to up their own exposure, I’d say Shell is well worth considering today. The long-term gains should roll up, provided they can withstand the short-term volatility.

Exchange-traded funds (ETFs) can help investors in UK shares balance their portfolios in an easy and low-cost way.

By investing in dozens, hundreds, or even thousands of stocks, these financial vehicles help individuals reduce risk and gain exposure to myriad market opportunities. That can be a great package in exchange for what is usually a modest annual management fee.

What’s more, UK investors don’t have to pay Stamp Duty when investing in an ETF. This tax is applicable to all UK shares that aren’t listed on Britain’s Alternative Investment Market (AIM) index.

Breakneck market growth means British share investors have hundreds of such funds to choose from today. Here are three I think could help investors build a balanced portfolio of growth, dividend, and value stocks.

Growth

Purchasing growth shares can deliver substantial capital appreciation over the long term. This is because companies that deliver above-average earnings growth also tend to enjoy spectacular share price growth.

The iShares FTSE 250 ETF (LSE:MIDD) is one fund growth investors may wish to consider. As its name and ticker imply, it’s focused on tracking the performance of the FTSE 250 index of UK shares.

The reasoning is that mid-cap shares like the ones this ETF holds have greater growth prospects than mature blue-chip shares, and thus the potential to rise more sharply in value. Names here include defence business Babcock International, emerging markets bank Lion Finance, and tech-focused fund the Allianz Technology Trust.

While it’s popular for its growth potential, this fund is no slouch when it comes to dividends either. Its 12-month trailing dividend yield is a healthy 3.1%.

Be mindful, however, that growth-focused funds like this could underperform during economic downturns.

Value

Like growth stocks, value shares are also popular because of their long-term price potential. The theory is that cheap high-quality companies can appreciate sharply in value as the market eventually recognises their worth.

To this end, the Xtrackers MSCI World Value ETF searches for marked-down shares based on formulae including price-to-book (P/B), forward price-to-earnings (P/E), and enterprise value-to-cash flow from operations (EV/CFO).

I like this ETF because of its wide geographical diversification. UK shares account for 9.2% of the fund, with companies in the US, Japan, and a large selection of European countries contributing to a well-balanced portfolio across developed markets.

Major holdings here include US tech shares Cisco, IBM, and Intel. I think it’s worth checking out despite the threat that Chinese technology shares could pose in the future.

Dividends

For dividends, I think investors should consider the Invesco US High Yield Fallen Angels ETF. Funds like these can help investors enjoy a return even during stock market downturns, through passive income.

This fund has a long history of offering market-mashing dividend yields. This is thanks to its focus on holding below-investment-grade bonds from businesses including Paramount Global, Kohl’s, and CVS Health.

Today the fund’s forward dividend yield is a large 6.9%.

The debt securities it invests in carry a higher risk of default. However, the fund aims to reduce this risk on overall returns with a large range of holdings (85 in total).