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S&P 500 Reclaims 2,900: Growth ETFs Leading the Rally
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After a tumultuous ride last month, Wall Street has staged a solid rebound this month with the three major indices having recovered more than 30% from their mid-March lows. This is primarily thanks to aggressive stimulus efforts and hopes of resumption in economic activity as many states begin to relax lockdown measures. The potential for an effective COVID-19 treatment also prompted a rally in the stock market (read: Healthcare ETFs to Gain on Progress in Coronavirus Vaccine).
All these developments shrugged off weak rounds of economic data, indicating that complacency has started building up in the stock market. The latest data showed that U.S. economy contracted at its sharpest pace by 4.8% in the first quarter since the Great Recession, ending the longest expansion in history.
The broad rally helped the S&P 500 Index to reclaim the 2,900 level and put it on track for its best month since 1974. It is up more than 13% for the month. Growth investing took the charge of this ascent with trillions of dollars in government spending spurring growth. The ultra-popular iShares Russell 1000 Growth ETF (IWF - Free Report) has gained 14.9% this month compared to gains of 13.7% for value counterpart iShares Russell 1000 Value ETF (IWD - Free Report) .
The strong trend is likely to continue as more companies are developing vaccines and treatments for the coronavirus and Federal Reserve said it is in no hurry to end its economic stimulus. Further, investors view the weak data as a backward-looking and have now become forward looking with the economy and business set to reopen, which will provide an uptick in demand (read: Wall Street at 7-Week High: 5 Sector ETFs on Fire).
Given this, we have highlighted five growth ETFs that have soared this month and are likely to do so given that these have a Zacks ETF Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Further, these funds are not confined to one sector and offers broad exposure to the market.
Invesco S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) – Up 30.9%
This fund targets the small-cap segment of the broad stock market by tracking the S&P SmallCap 600 Pure Growth Index and charging investors 35 bps in annual fees. Holding 139 securities in its basket, it is well spread out across components with each holding less than 2.2% share. Information technology, consumer discretionary, industrials, and health care are the top four sectors with double-digit allocation each. The fund has amassed $94.4 million in its asset base while trades in light volume of about 10,000 shares a day on average. It has a Zacks ETF Rank #2.
Invesco S&P MidCap 400 Pure Growth ETF (RFG - Free Report) – Up 29.9%
This ETF follows the S&P MidCap 400 Pure Growth Index, which measures the performance of securities that exhibit strong growth characteristics in the S&P MidCap 400 Index. It holds 89 stocks in its basket with each making up for no more than 3% of assets and charges 35 bps in annual fees. Information technology, industrials, health care and consumer discretionary are the top four sectors with double-digit allocation each. The fund has amassed $267.1 million and trades in average daily volume of 10,000 shares. It has a Zacks ETF Rank #3.
iShares Russell 2000 Growth ETF (IWO - Free Report) – Up 28.5%
This ETF tracks the Russell 2000 Growth Index, holding 1161 securities in its basket with none accounting for no more than 1.5% share. It is skewed toward healthcare with more than one-third of the portfolio, while information technology, industrials, and consumer discretionary rounded off the next three spots. With AUM of $7.9 billion, the product charges 24 bps in fees per year and trades in average daily volume of 637,000 shares. It has a Zacks ETF Rank #1 (read: 5 Growth ETFs & Stocks Set to Flourish in Spring).
Vanguard Russell 2000 Growth ETF (VTWG - Free Report) – Up 28.3%
With AUM of $293.1 million, this fund follows the Russell 2000 Growth Index and holds 1173 stocks in its basket with each accounting for no more than 1.4% of assets. Here also, healthcare is the top sector at 33.6% allocation while technology, financial services, and consumer discretionary rounded off the next three with double-digit exposure each. The ETF trades in average daily volume of 19,000 shares and has 0.15% in expense ratio. It has a Zacks ETF Rank #1.
First Trust Small Cap Growth AlphaDEX Fund (FYC - Free Report) - Up 28.1%
This fund also offers exposure to small cap growth stocks and follows the Nasdaq AlphaDEX Small Cap Growth Index. It holds a well-diversified portfolio of 263 stocks, with each accounting for less than 1%. The product has amassed $118.4 million in its asset base and trade in average daily volume of 46,000 shares. The ETF charges 70 bps in annual fees and has a Zacks ETF Rank #1.
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S&P 500 Reclaims 2,900: Growth ETFs Leading the Rally
After a tumultuous ride last month, Wall Street has staged a solid rebound this month with the three major indices having recovered more than 30% from their mid-March lows. This is primarily thanks to aggressive stimulus efforts and hopes of resumption in economic activity as many states begin to relax lockdown measures. The potential for an effective COVID-19 treatment also prompted a rally in the stock market (read: Healthcare ETFs to Gain on Progress in Coronavirus Vaccine).
All these developments shrugged off weak rounds of economic data, indicating that complacency has started building up in the stock market. The latest data showed that U.S. economy contracted at its sharpest pace by 4.8% in the first quarter since the Great Recession, ending the longest expansion in history.
The broad rally helped the S&P 500 Index to reclaim the 2,900 level and put it on track for its best month since 1974. It is up more than 13% for the month. Growth investing took the charge of this ascent with trillions of dollars in government spending spurring growth. The ultra-popular iShares Russell 1000 Growth ETF (IWF - Free Report) has gained 14.9% this month compared to gains of 13.7% for value counterpart iShares Russell 1000 Value ETF (IWD - Free Report) .
The strong trend is likely to continue as more companies are developing vaccines and treatments for the coronavirus and Federal Reserve said it is in no hurry to end its economic stimulus. Further, investors view the weak data as a backward-looking and have now become forward looking with the economy and business set to reopen, which will provide an uptick in demand (read: Wall Street at 7-Week High: 5 Sector ETFs on Fire).
Given this, we have highlighted five growth ETFs that have soared this month and are likely to do so given that these have a Zacks ETF Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Further, these funds are not confined to one sector and offers broad exposure to the market.
Invesco S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) – Up 30.9%
This fund targets the small-cap segment of the broad stock market by tracking the S&P SmallCap 600 Pure Growth Index and charging investors 35 bps in annual fees. Holding 139 securities in its basket, it is well spread out across components with each holding less than 2.2% share. Information technology, consumer discretionary, industrials, and health care are the top four sectors with double-digit allocation each. The fund has amassed $94.4 million in its asset base while trades in light volume of about 10,000 shares a day on average. It has a Zacks ETF Rank #2.
Invesco S&P MidCap 400 Pure Growth ETF (RFG - Free Report) – Up 29.9%
This ETF follows the S&P MidCap 400 Pure Growth Index, which measures the performance of securities that exhibit strong growth characteristics in the S&P MidCap 400 Index. It holds 89 stocks in its basket with each making up for no more than 3% of assets and charges 35 bps in annual fees. Information technology, industrials, health care and consumer discretionary are the top four sectors with double-digit allocation each. The fund has amassed $267.1 million and trades in average daily volume of 10,000 shares. It has a Zacks ETF Rank #3.
iShares Russell 2000 Growth ETF (IWO - Free Report) – Up 28.5%
This ETF tracks the Russell 2000 Growth Index, holding 1161 securities in its basket with none accounting for no more than 1.5% share. It is skewed toward healthcare with more than one-third of the portfolio, while information technology, industrials, and consumer discretionary rounded off the next three spots. With AUM of $7.9 billion, the product charges 24 bps in fees per year and trades in average daily volume of 637,000 shares. It has a Zacks ETF Rank #1 (read: 5 Growth ETFs & Stocks Set to Flourish in Spring).
Vanguard Russell 2000 Growth ETF (VTWG - Free Report) – Up 28.3%
With AUM of $293.1 million, this fund follows the Russell 2000 Growth Index and holds 1173 stocks in its basket with each accounting for no more than 1.4% of assets. Here also, healthcare is the top sector at 33.6% allocation while technology, financial services, and consumer discretionary rounded off the next three with double-digit exposure each. The ETF trades in average daily volume of 19,000 shares and has 0.15% in expense ratio. It has a Zacks ETF Rank #1.
First Trust Small Cap Growth AlphaDEX Fund (FYC - Free Report) - Up 28.1%
This fund also offers exposure to small cap growth stocks and follows the Nasdaq AlphaDEX Small Cap Growth Index. It holds a well-diversified portfolio of 263 stocks, with each accounting for less than 1%. The product has amassed $118.4 million in its asset base and trade in average daily volume of 46,000 shares. The ETF charges 70 bps in annual fees and has a Zacks ETF Rank #1.
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 >>