Below we have selected five large-cap growth ETFs that provide exposure to the broad stock market instead of a particular sector. All these funds have a Zacks Rank #2 (Buy) with a lower expense ratio of under 10%, making them superior relative to other choices in the growth space.
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While value investing has garnered immense attention in the volatile markets, growth stocks have more upside potential in the coming month buoyed by the spring fever. This is especially true, as growth stocks refer to high-quality stocks that are likely to witness revenues and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth stocks tend to outperform during an uptrend and, guess what, the recent market sell-off has made many growth stocks a bargain buy. As such, a focus on the basket of the growth stocks via ETFs could be a less risky way to tap into the same broad trends.
1. Schwab U.S. Large-Cap Growth ETF (SCHG)
With AUM of $5.4 billion, SCHG follows the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 411 stocks in its basket with large concentration on the top firm Apple (AAPL) at 7.3% while other firms hold less than 4.8% share. The product is heavy on information technology at 31.7% while consumer discretionary, health care and industrials also get a double-digit exposure each in the portfolio. It charges 4 bps in annual fees and saw average volume of around 340,000 shares a day. The ETF has gained 1.6% so far this year.
2. SPDR S&P 500 Growth ETF (SPYG)
This product follows the S&P 500 Growth Index, holding 294 stocks in its basket. It is pretty well spread across components with none holding more than 7.3% of assets. Like its cousins, SPYG is also heavy on information technology with 40.7% allocation, while healthcare, consumer discretionary and industrials round off the next three. The product has amassed $1.9 billion in its asset base and charges investors 4 bps in annual fees. Volume is good exchanging more than 561,000 shares a day on average. The ETF has gained 1.9% so far this year.
3. iShares Core S&P U.S. Growth ETF (IUSG)
This product tracks the S&P 900 Growth Index and is home to 536 stocks with a slight tilt toward Apple. Here again, information technology is the top sector accounting for 40% of the portfolio while healthcare, consumer discretionary, and industrials get double-digit exposure each. The fund has accumulated $3.6 billion in its asset base and trades in solid volume of 533,000 shares a day on average. It has 0.05% in expense ratio and is up 1.8% in the year-to-date time frame.
4. Vanguard Growth ETF (VUG)
This ETF follows the CRSP US Large Cap Growth Index, holding 303 stocks in its basket with none accounting for more than 7.3% share. Technology and consumer services are the top two sectors with 27.8% and 20.8% share, respectively. The fund has AUM of $32.2 billion and average daily volume of 890,000 shares. It charges 6 bps in fees per year and has returned about 0.9% so far this year.
5. Vanguard Mega Cap Growth ETF (MGK)
With AUM of $3.5 billion, this ETF tracks the CRSP US Mega Cap Growth Index. It holds 129 securities in its basket with none accounting for more than 8.7% of total assets. It has key holdings in information technology, consumer services, healthcare, financials, industrials and consumer goods that account for double-digit exposure each. It charges 7 basis points in annual fees and trades in good volume of around 175,000 shares a day on average. The fund has gained 0.9% so far this year.
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