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5 Ultra-Cheap Growth ETFs for a Large-Cap Play This Spring
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Volatility and uncertainty have been playing foul in the U.S. stock market over the past couple of months. While the list of worries include higher rates, Washington turmoil, and tech selloff, the latest reason for the sluggish trading remains fears over a trade war between the United States and China.
The U.S.-China trade dispute accelerated after the world’s second-biggest country announced a new tariff of 25% on $50 billion of U.S. goods, including soybeans, aircraft and autos in response to a proposed U.S. tariff hike on $50 billion worth of Chinese goods. Last weekend, China came lashing down on America and Trump’s tariff on steel and aluminum import with a retaliatory tariff of up to 25% on 128 American food products, including dried fruits, sparkling wine and stainless steel pipes, effective Apr 2 (read: China Retaliates: ETFs & Stocks on Radar).
However, the concerns have eased after reports revealed that the Trump administration is in negotiation with China rather than a trade war. This coupled with growing economy and strong Q1 earnings season have pushed the stocks higher with the major bourses turning green for the year. The confidence in the economy and the nine-year old bull market has been robust buoyed by increasing consumer spending, rising consumer confidence and 17-year low unemployment.
Total Q1 earnings for the S&P 500 index are expected to be up 16% from the same period last year on 7.4% higher revenues. This represents the highest quarterly earnings growth pace in seven years. Further, the euphoria surrounding the tax reform has been the biggest catalyst this year, as it will perk up the economy and save billions for corporations, leading to reflation trade and higher earnings.
Historically, April has been the best-performing month for the S&P 500 in the past 20 years, delivering average monthly returns of 1.8%, according to data compiled by Frank Cappelleri, executive director at brokerage firm Instinet. All these combinations bode well for the spring season, when economic activities across all the sectors are likely to step up, boosting further optimism.
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 (read: What Yellen's Final Meeting Means for These ETFs).
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.
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.
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 - Free Report) 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 (read: Beat the Tech Blues With These Inverse ETFs).
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.
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.
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.
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 (read: ETFs & Stocks to Buy on Falling Dollar).
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5 Ultra-Cheap Growth ETFs for a Large-Cap Play This Spring
Volatility and uncertainty have been playing foul in the U.S. stock market over the past couple of months. While the list of worries include higher rates, Washington turmoil, and tech selloff, the latest reason for the sluggish trading remains fears over a trade war between the United States and China.
The U.S.-China trade dispute accelerated after the world’s second-biggest country announced a new tariff of 25% on $50 billion of U.S. goods, including soybeans, aircraft and autos in response to a proposed U.S. tariff hike on $50 billion worth of Chinese goods. Last weekend, China came lashing down on America and Trump’s tariff on steel and aluminum import with a retaliatory tariff of up to 25% on 128 American food products, including dried fruits, sparkling wine and stainless steel pipes, effective Apr 2 (read: China Retaliates: ETFs & Stocks on Radar).
However, the concerns have eased after reports revealed that the Trump administration is in negotiation with China rather than a trade war. This coupled with growing economy and strong Q1 earnings season have pushed the stocks higher with the major bourses turning green for the year. The confidence in the economy and the nine-year old bull market has been robust buoyed by increasing consumer spending, rising consumer confidence and 17-year low unemployment.
Total Q1 earnings for the S&P 500 index are expected to be up 16% from the same period last year on 7.4% higher revenues. This represents the highest quarterly earnings growth pace in seven years. Further, the euphoria surrounding the tax reform has been the biggest catalyst this year, as it will perk up the economy and save billions for corporations, leading to reflation trade and higher earnings.
Historically, April has been the best-performing month for the S&P 500 in the past 20 years, delivering average monthly returns of 1.8%, according to data compiled by Frank Cappelleri, executive director at brokerage firm Instinet. All these combinations bode well for the spring season, when economic activities across all the sectors are likely to step up, boosting further optimism.
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 (read: What Yellen's Final Meeting Means for These ETFs).
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.
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.
Schwab U.S. Large-Cap Growth ETF (SCHG - Free Report)
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 - Free Report) 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 (read: Beat the Tech Blues With These Inverse ETFs).
SPDR S&P 500 Growth ETF (SPYG - Free Report)
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.
iShares Core S&P U.S. Growth ETF (IUSG - Free Report)
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.
Vanguard Growth ETF (VUG - Free Report)
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.
Vanguard Mega Cap Growth ETF (MGK - Free Report)
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 (read: ETFs & Stocks to Buy on Falling Dollar).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>