When it comes to investing, growth stocks are often the stars of the show. These stocks have the potential to double or even triple in value within a year, making them highly attractive to investors. However, identifying these top performers can be time-consuming and challenging. That’s where growth exchange-traded funds (ETFs) come in – they offer a convenient way to invest in a diversified portfolio of potential winners in one fell swoop.
Here are some key factors to consider when choosing a growth ETF:
What to look for in a growth ETF
Before investing in an ETF, it’s important to consider the following:
- Long-term track record: Review the fund’s five- and ten-year performance to gauge its consistency and potential for future returns.
- Diversification: Ensure the ETF is well-diversified across different sectors to reduce risk.
- Expense ratio: Consider the annual fees you’ll pay to own the fund.
- Fund holdings: Examine the top holdings to see if they align with the fund’s investment objective.
Here are some of the top growth ETFs to consider:
Best growth ETFs
iShares Russell Top 200 Growth ETF (IWY)
This ETF tracks an index of large-cap U.S. growth stocks, with a focus on tech giants like Apple, Amazon, and Microsoft.
- 5-year returns (annualized): 19.4 percent
- Expense ratio: 0.20 percent
- Dividend yield: 0.5 percent
Schwab U.S. Large-Cap Growth ETF (SCHG)
This ETF offers strong performance at a low cost, with a focus on tech stocks such as Apple.
- 5-year returns (annualized): 18.7 percent
- Expense ratio: 0.04 percent
- Dividend yield: 0.4 percent
Vanguard Mega Cap Growth ETF (MGK)
This ETF tracks the CRSP U.S. Mega Cap Growth Index, with a concentration in tech and consumer discretionary stocks.
- 5-year returns (annualized): 18.5 percent
- Expense ratio: 0.07 percent
- Dividend yield: 0.4 percent
Bottom line
ETFs provide a convenient way to invest in growth stocks without the hassle of individual stock selection. By choosing the right ETF, investors can enjoy strong returns and minimize risks. For more investment options, check out Bankrate’s list of best ETFs.
Editorial Disclaimer: All investors should conduct their own research before making investment decisions. Past performance does not guarantee future results.