Pros Pick Their Top 5 Growth ETFs - InvestingChannel

Pros Pick Their Top 5 Growth ETFs

Proprietary Data Insights

Financial Pros’ Top Semiconductor ETF Searches in the Last Month

RankTickerNameSearches
#1VUGVanguard Growth ETF16
#2VONGVanguard Russell 1000 Growth ETF4
#3QUALiShares Edge MSCI USA Quality Factor ETF2
#4DGRWWisdomTree U.S. Dividend Growth Fund1
#5VBKVanguard Small Cap Growth ETF1
#ad Decoding Your Finances: The Juice Edition

Pros Pick Their Top 5 Growth ETFs

When markets are in disarray, we look to professionals for guidance.

And there’s no better way to do that than seeing which stocks and ETFs money managers are researching.

According to our TrackStar data, growth ETFs have gotten more attention in the last two weeks, with Vanguard’s Growth ETF VUG standing out among them.

In the past, we’ve found thematic strategy ETFs like dividends don’t perform as well as the broader market.

But hold on to your hats because that’s about to change…

Key Facts About VUG

  • Net assets: $124.7 billion
  • 12-month trailing yield: 0.55%
  • Inception: January 26, 2004
  • Expense ratio: 0.04%
  • Number of holdings: 190

What do you get when you combine the low costs from Vanguard with a growth-oriented portfolio?

The Vanguard Growth ETF VUG.

This ETF owns large-cap companies within the growth sector of the U.S. equity market determined by the CRSP U.S. Large Cap Growth Index.

Companies are selected based on growth factors, including earnings, sales, return on equity, and cash flow generation, with a $10 billion minimum market capitalization.

MSFT

Source: Vanguard

VUG holds many of the same stocks as the S&P 500. However, the total portfolio contains just 190 stocks compared to the 500 in the S&P 500.

Sectors

Source: Vanguard

Additionally, the VUG is even more heavily weighted towards technology companies since those often display the most growth potential.

Lastly, it’s worth noting the ETF has nearly $125 billion under management, an enormous sum compared to many other ETFs.

Performance

Since its inception, the VUG ETF has done exceptionally well, keeping close to its benchmark.

Overall performance has averaged 11.34% annually, with the ETF doing much better over the past several years.

VUG

Source: Vanguard

We should also point out that the VUG has outperformed the S&P 500 over the past 5-years.

Competition

While VUG is an outstanding choice for a growth-oriented ETF, there are several others actively searched by financial pros we wanted to highlight.

  • Vanguard Russell 1000 Growth ETF (VONG): Targets top U.S. large-cap growth stocks, tracking the Russell 1000 Growth Index with a market cap weighting, emphasizing high-growth companies.
  • iShares Edge MSCI USA Quality Factor ETF (QUAL): Invests in U.S. stocks with high ROE, stable earnings, and low debt, tracking the MSCI USA Quality Index, focusing on quality over pure growth.
  • WisdomTree U.S. Dividend Growth Fund (DGRW): Blends growth with income, investing in high-quality U.S. companies with robust earnings and dividend growth, tracking the WisdomTree U.S. Quality Dividend Growth Index.
  • Vanguard Small Cap Growth ETF (VBK): Captures high-growth potential in U.S. small-cap stocks, tracking the CRSP US Small Cap Growth Index with a market cap weighting, targeting emerging growth leaders.

Net Assets

We found it rather interesting that VONG outperformed VUG as ETFs with more diversification tend to underperform. However, the overall difference isn’t significant.

What’s also noticeable here is how badly small-cap companies underperformed, a common theme we’ve seen across the markets in the past decade.

Our Opinion 10/10 

VUG is an excellent ETF for achieving outperformance. It combines high liquidity and low expenses while seemingly selecting the best of the S&P 500 stocks.

While the narrow focus on technology might be concerning, the weighting will change should other sectors start kicking into high gear.

Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here

Related posts

Advisors in Focus- January 6, 2021

Gavin Maguire

Advisors in Focus- February 15, 2021

Gavin Maguire

Advisors in Focus- February 22, 2021

Gavin Maguire

Advisors in Focus- February 28, 2021

Gavin Maguire

Advisors in Focus- March 18, 2021

Gavin Maguire

Advisors in Focus- March 21, 2021

Gavin Maguire