There are many growth ETFs on the market, and the best ones can help you make the most of your investment. But just what makes these funds the best?
Vanguard Growth Index Fund (VUG)
The Vanguard Growth Index Fund (VUG) is a mutual fund that is designed to give you exposure to large-cap U.S. stocks. It is also a well-diversified investment. The fund’s main index is a composite of more than 400 holdings.
The fund is also linked to a benchmark index that measures the performance of large-capitalization growth stocks. It was named the S&P 500/Barra Growth Index in the past, but is now the CRSP US Large Cap Growth Index. The index is an amalgam of six factors that determine the growth of a stock.
While the VUG does a decent job of tracking the CRSP, it may not be the right fund for your needs. If you’re looking for a comprehensive diversified portfolio, you might be better off investing in an ETF. The VUG is a passively managed fund that invests in large-cap US companies and uses a multi-factor methodology to maximize returns.
The BlackRock iShares Best Growth ETF offers investors an opportunity to take advantage of exceptional market performance. This investment product is available in three fund families: Core, Global, and Small Cap. Each fund has different approaches to growth investing.
The Core series is a tax-efficient group of products that track high quality, established indices. These funds combine 80% equity with 20% fixed income for a low cost. The Core S&P Small-Cap ETF offers investors access to 600 of the smallest companies in the U.S. The Global Clean Energy ETF tracks clean energy.
The USRT offers investors a yield of nearly 4%. The fund also has a focus on real estate. Its risk is similar to an intermediate-term government bond ETF. However, it doesn’t have the largest REIT focus on the market.
ARK Innovation ETF
If you’re looking for a high-growth ETF to invest in, you may want to consider the ARK Innovation ETF. The fund is an actively managed portfolio that invests in fast-growing companies in innovative industries. It’s designed to be a long-term investment that offers above-average returns. But it’s not for everyone.
While the ARK Innovation ETF has gained more than the S&P 500 in each of the last three years, it has also lost nearly half its value over the past year. Investors are concerned about the fund’s ability to maintain its growth momentum.
The ARK Innovation ETF has a portfolio that includes a number of large, well-established companies, but it also invests in disruptive innovation. These include firms leading the way in next-generation internet infrastructure, genomics, and automation.
The ETF’s top holdings include Square, Teladoc, Roku, and Tesla. It’s also invested in companies like PACCAR, which is developing autonomous trucks powered by hydrogen fuel cells.
iShares Russell 2000
The iShares Russell 2000 Best Growth ETF offers investors an opportunity to invest in the small cap growth segment of the United States equity market. The fund offers exposure to the performance of 2,000 of the smallest publicly traded companies in the U.S. These stocks tend to have a higher potential than large cap companies.
The iShares Russell 2000 Growth ETF tracks the performance of the Russell 2000 Growth Index, a comprehensive barometer for the small-cap growth segment of the U.S. equity market. The index measures the performance of small-cap growth firms that have higher price-to-book ratios, yields and forecasted growth.
The iShares Russell 2000 ETF has assets of over $9.68 billion and is backed by Blackrock, Inc. It is a passively managed exchange-traded fund. The fund is rated as a bronze-level Morningstar Analyst.
Smart beta growth ETFs
Smart beta growth ETFs offer investors the opportunity to profit from the same fundamentals as active managers. These funds seek to passively track an index, while delivering lower costs and higher diversification. However, it is important to note that smart beta products do not replicate all stocks on an index.
In fact, the return of a smart beta product varies from fund to fund. There are many factors that can be used to construct an effective smart beta strategy. The factors that are most commonly used are growth, momentum, value, size, and quality. The most successful of these factors is the growth factor.
The Value factor is also a time-tested source of historical returns. It tends to be associated with large, dividend-paying companies.
The Growth factor is based on earnings-per-share growth. While there is a lot of research on this factor, there are fewer empirical studies that confirm positive excess returns.