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Growth ETFs Took Charge to Start 2H: Will This Continue?
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After logging the strongest first-half performance in decades, the bulls are showing no signs of checking the global growth concern. This is primarily thanks to trade optimism, which is acting as the biggest catalyst for this year. The trade truce between the United States and China once again sent the S&P 500 and Dow Jones to a new all-time high to start the second half.
Additionally, the Fed signaled that it will cut interest rates anytime soon, sparking a rally in the stock market. In fact, bouts of weak data this week have stirred speculation over easy money policies. Lower rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth and is thus a boon for the stock market (read: 5 U.S. ETFs Seeing Fireworks Ahead of July Fourth).
Further, oil price rallied following the extended OPEC oil supply cut deal until March 2020. A slew of mergers & acquisitions added to the strength.
Given the extremely bullish trends, growth investing took charge this week with many ETFs hitting fresh highs. This is especially true, as growth stocks refer to high-quality stocks that are likely to witness revenue 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.
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 when compared to value stocks.
Still, we have highlighted those ETFs that hit all-time highs in the recent trading session and has the momentum to continue outperforming if the trend remained the same. This is because all these funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
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 7.9% of the assets. SPYG is heavy on information technology sector with 26.5% allocation, while health care, communication services, and consumer discretionary round off the next three. The product has amassed $5.5 billion in its asset base and charges investors 4 bps in annual fees. Volume is good exchanging about 1.5 million shares a day on average. The ETF has gained 2.9% over the past week and has a Zacks ETF Rank #1 (read: S&P 500 Hits New High to Start 2H: Top-Ranked ETFs to Buy).
With AUM of $8 billion, SCHG follows the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 413 stocks in its basket with large concentration on the top three firms. From a sector look, information technology takes the top spot at 28.5% share while health care, consumer discretionary and communication services also get a double-digit exposure each in the portfolio. It charges 4 bps in annual fees and saw average volume of around 549,000 shares a day. The ETF has gained 3% in a week and has a Zacks ETF Rank #2.
With AUM of $4.5 billion, this ETF tracks the CRSP US Mega Cap Growth Index. It holds 122 securities in its basket with none accounting for more than 9.4% of the total assets. It has key holdings in technology, consumer services, financials and industrials that account for double-digit exposure each. It charges 7 basis points in annual fees and trades in good volume of around 157,000 shares a day on average. The fund has gained 3.1% in a week and sports a Zacks ETF Rank #1 (read: Why You Should Buy Growth ETFs & Stocks Now).
This fund offers exposure to 119 large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell Top 200 Growth Index. Like its peers, it is concentrated on the information technology sector at 38.3% share while health care, consumer discretionary and communication also receive double-digit allocation each. Additionally, it is also guilty of concentration on the top three firms. The fund has $1.5 billion in AUM and an expense ratio of 0.20%. It trades on average daily volume of more than 80,000 shares and is up 3% over the past week. IWY has a Zacks ETF Rank #1.
This ETF targets the mid-cap growth segment and tracks the Russell MidCap Growth Index. With AUM of $11.2 billion, it holds 401 securities in its basket with none accounting for more than 1.20% of the total assets. Here again, information technology is the top sector making up for 33.7% exposure while industrials, consumer discretionary and health care round off the next three spots. The fund charges 25 bps in annual fees and trades in average daily volume of 510,000 shares. The product has a Zacks ETF Rank #1 (read: Mid-Cap ETFs Outperforming to Start June).
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Growth ETFs Took Charge to Start 2H: Will This Continue?
After logging the strongest first-half performance in decades, the bulls are showing no signs of checking the global growth concern. This is primarily thanks to trade optimism, which is acting as the biggest catalyst for this year. The trade truce between the United States and China once again sent the S&P 500 and Dow Jones to a new all-time high to start the second half.
Additionally, the Fed signaled that it will cut interest rates anytime soon, sparking a rally in the stock market. In fact, bouts of weak data this week have stirred speculation over easy money policies. Lower rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth and is thus a boon for the stock market (read: 5 U.S. ETFs Seeing Fireworks Ahead of July Fourth).
Further, oil price rallied following the extended OPEC oil supply cut deal until March 2020. A slew of mergers & acquisitions added to the strength.
Given the extremely bullish trends, growth investing took charge this week with many ETFs hitting fresh highs. This is especially true, as growth stocks refer to high-quality stocks that are likely to witness revenue 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.
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 when compared to value stocks.
Still, we have highlighted those ETFs that hit all-time highs in the recent trading session and has the momentum to continue outperforming if the trend remained the same. This is because all these funds have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
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 7.9% of the assets. SPYG is heavy on information technology sector with 26.5% allocation, while health care, communication services, and consumer discretionary round off the next three. The product has amassed $5.5 billion in its asset base and charges investors 4 bps in annual fees. Volume is good exchanging about 1.5 million shares a day on average. The ETF has gained 2.9% over the past week and has a Zacks ETF Rank #1 (read: S&P 500 Hits New High to Start 2H: Top-Ranked ETFs to Buy).
Schwab U.S. Large-Cap Growth ETF (SCHG - Free Report)
With AUM of $8 billion, SCHG follows the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 413 stocks in its basket with large concentration on the top three firms. From a sector look, information technology takes the top spot at 28.5% share while health care, consumer discretionary and communication services also get a double-digit exposure each in the portfolio. It charges 4 bps in annual fees and saw average volume of around 549,000 shares a day. The ETF has gained 3% in a week and has a Zacks ETF Rank #2.
Vanguard Mega Cap Growth ETF (MGK - Free Report)
With AUM of $4.5 billion, this ETF tracks the CRSP US Mega Cap Growth Index. It holds 122 securities in its basket with none accounting for more than 9.4% of the total assets. It has key holdings in technology, consumer services, financials and industrials that account for double-digit exposure each. It charges 7 basis points in annual fees and trades in good volume of around 157,000 shares a day on average. The fund has gained 3.1% in a week and sports a Zacks ETF Rank #1 (read: Why You Should Buy Growth ETFs & Stocks Now).
iShares Russell Top 200 Growth ETF (IWY - Free Report)
This fund offers exposure to 119 large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell Top 200 Growth Index. Like its peers, it is concentrated on the information technology sector at 38.3% share while health care, consumer discretionary and communication also receive double-digit allocation each. Additionally, it is also guilty of concentration on the top three firms. The fund has $1.5 billion in AUM and an expense ratio of 0.20%. It trades on average daily volume of more than 80,000 shares and is up 3% over the past week. IWY has a Zacks ETF Rank #1.
iShares Russell Mid-Cap Growth ETF (IWP - Free Report)
This ETF targets the mid-cap growth segment and tracks the Russell MidCap Growth Index. With AUM of $11.2 billion, it holds 401 securities in its basket with none accounting for more than 1.20% of the total assets. Here again, information technology is the top sector making up for 33.7% exposure while industrials, consumer discretionary and health care round off the next three spots. The fund charges 25 bps in annual fees and trades in average daily volume of 510,000 shares. The product has a Zacks ETF Rank #1 (read: Mid-Cap ETFs Outperforming to Start June).
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 >>