This ETF Has A Unique Approach To Investing In Growth Stocks

Here's a unique way to invest in growth stocks: invest in companies which have large patent values. Patents can create defendable competitive advantages for businesses, which Warren Buffett refers to as 'moat' and which can be critical for long-term growth. Having a lot of patents doesn't guarantee success, but it can be a good sign of a growth-oriented business nonetheless.

An exchange-traded fund (ETF) that invests in companies based on their patents is the Pacer Nasdaq International Patent Leaders ETF (NASDAQ: PATN). It describes itself as,“a strategy-driven exchange traded fund that seeks to capture international growth by tracking the top 100 ranked companies by patent valuation.”

It has an expense ratio of 0.65% which is on the high side when it comes to many ETFs, but it may be justifiable given the fund's growth potential and its relatively unique approach. This is also a fairly global fund, with the top three stocks in its portfolio being Taiwan Semiconductor Manufacturing (NYSE:TSM), Tencent Holdings (OTC:TCEHY), and ASML Holding (NASDAQ:ASML). Together, these stocks account for right around 24% of the fund's holdings.

Tech stocks make up 37% of its portfolio, followed by industrials at 16% and healthcare stocks at 13%. The ETF has been doing remarkably well this year, rising by around 30%, which is better than the S&P 500 's performance of 13% over the same period.

Whether you want a unique way to invest in growth stocks or just a fund that gives you some better diversification than tracking the most highly valued tech stocks, this ETF can be a good option to consider putting in your portfolio today.

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