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Amid global growth concerns, the bulls on the Wall Street came roaring this year following the Fed’s dovish stance, a strong jobs market, an oil price rebound and a slew of other positive news.
In particular, signs of progress over trade negotiations between the United States and China have renewed the appeal for riskier assets. In the latest step, the United States and China are set to start fresh talks in Washington on Feb 19 with follow-up sessions planned for Feb 21. Per CNBC, the nearly year-long U.S.-China trade dispute seems to be ending as there are signals of a done deal (read: Sector ETFs & Stocks to Rally on US-Sino Trade Hopes).
Further, rising wage, subdued inflation, higher consumer confidence and increasing consumer spending also bode well for the American economy. All these combinations will support the bull market to complete its decade long run on Mar 9 this year.
While value investing has garnered immense attention in volatile markets, growth stocks have more upside potential in the coming months, especially if the trade deal is reached (read: 3 Overlooked Value ETFs & Stocks to Grab Now).
Why Growth?
Growth stocks refer to high-quality stocks that are likely to witness revenue and earnings growth 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 higher share prices. As such, growth funds tend to outperform during an uptrend.
However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility especially compared to value stocks
Below we have selected five growth ETFs that provide exposure to the broad stock market instead of a particular sector. All these funds have a solid Zacks ETF Rank #1 (Strong Buy) or #2 (Buy) with a lower expense ratio of under 10%, making them superior relative to other choices in the growth space (read: Guide to the 25 Cheapest ETFs).
This product follows the S&P 500 Growth Index, holding 295 stocks in its basket. It is pretty well spread across components with none holding more than 6.9% of the assets. SPYG is also heavy on information technology with 25.1% allocation, while healthcare, communication services, and consumer discretionary round off the next three. The product has amassed $3.9 billion in its asset base and charges investors 4 bps in annual fees. Volume is good exchanging about 2.1 million shares a day on average. The ETF has gained 10.6% so far this year and has a Zacks ETF Rank #1.
This ETF follows the CRSP US Large Cap Growth Index, holding 303 stocks in its basket with none accounting for more than 6.2% share. Technology and consumer services are the top two sectors with 30.3% and 20.7% share, respectively. The fund has AUM of $36.7 billion and average daily volume of more than a million shares. It charges 5 bps in fees per year and has returned about 12.5% so far this year. VUG has a Zacks ETF Rank #1.
With AUM of $4 billion, this ETF tracks the CRSP US Mega Cap Growth Index. It holds 121 securities in its basket with none accounting for more than 7.6% of the total assets. It has key holdings in technology, consumer services, industrials, financials, and healthcare that account for double-digit exposure each. It charges 7 basis points in annual fees and trades in good volume of more than 200,000 shares a day on average. The fund has gained 11.8% so far this year and has a Zacks ETF Rank #2.
This ETF targets the growth corner of the small cap space. It tracks the CRSP US Small Cap Growth Index, holding 634 securities in its basket. The fund is widely diversified across a number of sectors and securities. Health care, industrials, technology, financials, and consumer services make up for double-digit allocation each and none of the securities holds more than 0.7% of total assets in the basket. The product has amassed $8.5 billion in its asset base while trading in a good volume of around 203,000 shares. VBK charges 7 bps in fees per year and has surged 18.5% in the year-to-date timeframe. It has a Zacks ETF Rank #2 (read: 4 Reasons to Bet on Top-Ranked Small-Cap Growth ETFs).
This fund offers exposure to the mid-cap segment of the broader market and follows the CRSP US Mid Cap Growth Index. Holding 170 securities in its basket, it is highly diversified across each component with none accounting for more than 1.7% share. In terms of sector exposure, industrials occupies the top position at 25.1%, followed by technology (22.6%), financials (17.0%), and health care (13.2%). The product has managed nearly $5.8 billion in its asset base and trades in a good volume of around 188,000 shares a day on average. It charges 7 bps in annual fees and has risen 15.9% in the same timeframe. The fund has a Zacks ETF Rank #1 (read: Why Should You Buy Mid-Cap ETFs Now?).
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5 Ultra-Cheap Top-Ranked Growth ETFs to Buy Now
Amid global growth concerns, the bulls on the Wall Street came roaring this year following the Fed’s dovish stance, a strong jobs market, an oil price rebound and a slew of other positive news.
In particular, signs of progress over trade negotiations between the United States and China have renewed the appeal for riskier assets. In the latest step, the United States and China are set to start fresh talks in Washington on Feb 19 with follow-up sessions planned for Feb 21. Per CNBC, the nearly year-long U.S.-China trade dispute seems to be ending as there are signals of a done deal (read: Sector ETFs & Stocks to Rally on US-Sino Trade Hopes).
Further, rising wage, subdued inflation, higher consumer confidence and increasing consumer spending also bode well for the American economy. All these combinations will support the bull market to complete its decade long run on Mar 9 this year.
While value investing has garnered immense attention in volatile markets, growth stocks have more upside potential in the coming months, especially if the trade deal is reached (read: 3 Overlooked Value ETFs & Stocks to Grab Now).
Why Growth?
Growth stocks refer to high-quality stocks that are likely to witness revenue and earnings growth 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 higher share prices. As such, growth funds tend to outperform during an uptrend.
However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility especially compared to value stocks
Below we have selected five growth ETFs that provide exposure to the broad stock market instead of a particular sector. All these funds have a solid Zacks ETF Rank #1 (Strong Buy) or #2 (Buy) with a lower expense ratio of under 10%, making them superior relative to other choices in the growth space (read: Guide to the 25 Cheapest ETFs).
SPDR S&P 500 Growth ETF (SPYG - Free Report)
This product follows the S&P 500 Growth Index, holding 295 stocks in its basket. It is pretty well spread across components with none holding more than 6.9% of the assets. SPYG is also heavy on information technology with 25.1% allocation, while healthcare, communication services, and consumer discretionary round off the next three. The product has amassed $3.9 billion in its asset base and charges investors 4 bps in annual fees. Volume is good exchanging about 2.1 million shares a day on average. The ETF has gained 10.6% so far this year and has a Zacks ETF Rank #1.
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 6.2% share. Technology and consumer services are the top two sectors with 30.3% and 20.7% share, respectively. The fund has AUM of $36.7 billion and average daily volume of more than a million shares. It charges 5 bps in fees per year and has returned about 12.5% so far this year. VUG has a Zacks ETF Rank #1.
Vanguard Mega Cap Growth ETF (MGK - Free Report)
With AUM of $4 billion, this ETF tracks the CRSP US Mega Cap Growth Index. It holds 121 securities in its basket with none accounting for more than 7.6% of the total assets. It has key holdings in technology, consumer services, industrials, financials, and healthcare that account for double-digit exposure each. It charges 7 basis points in annual fees and trades in good volume of more than 200,000 shares a day on average. The fund has gained 11.8% so far this year and has a Zacks ETF Rank #2.
Vanguard Small-Cap Growth ETF (VBK - Free Report)
This ETF targets the growth corner of the small cap space. It tracks the CRSP US Small Cap Growth Index, holding 634 securities in its basket. The fund is widely diversified across a number of sectors and securities. Health care, industrials, technology, financials, and consumer services make up for double-digit allocation each and none of the securities holds more than 0.7% of total assets in the basket. The product has amassed $8.5 billion in its asset base while trading in a good volume of around 203,000 shares. VBK charges 7 bps in fees per year and has surged 18.5% in the year-to-date timeframe. It has a Zacks ETF Rank #2 (read: 4 Reasons to Bet on Top-Ranked Small-Cap Growth ETFs).
Vanguard Mid-Cap Growth ETF (VOT - Free Report)
This fund offers exposure to the mid-cap segment of the broader market and follows the CRSP US Mid Cap Growth Index. Holding 170 securities in its basket, it is highly diversified across each component with none accounting for more than 1.7% share. In terms of sector exposure, industrials occupies the top position at 25.1%, followed by technology (22.6%), financials (17.0%), and health care (13.2%). The product has managed nearly $5.8 billion in its asset base and trades in a good volume of around 188,000 shares a day on average. It charges 7 bps in annual fees and has risen 15.9% in the same timeframe. The fund has a Zacks ETF Rank #1 (read: Why Should You Buy Mid-Cap ETFs Now?).
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 >>