ETFs
Top 3 Vanguard ETFs for Growth Investors
As one of the leading ETF providers, Vanguard has a lot to offer growth investors.
Vanguard has been the most popular ETF option so far in 2024. Vanguard ETFs have seen the largest year-to-date inflows of any fund family, and the firm is closing the gap with the largest ETF manager, BlackRock (NYSE:BLK).
Until July 5, according to ETF.comVanguard has seen $124.7 billion in net inflows into its ETFs, more than any other fund, including BlackRock, which has seen $100.3 billion in net inflows year to date.
Vanguard now manages $2.68 trillion in ETF assets, making it the second largest investment fund in Europe after Black rock to $2.86 trillion.
The company currently offers 86 different ETFs covering a range of investment styles and categories. Its growth ETFs have been in high demand this year, and here are the three best Vanguard ETFs for growth investors.
Vanguard ETF for Information Technology
THE Vanguard ETF for Information Technology (NYSEARCA:VGT) has been the best performing stock in the Vanguard ETF family over the long term.
Over the past 10 years, this Vanguard Exchange Traded Fund has posted an average annual return of 21% per year, as of June 30. That beats the Nasdaq 100, the Nasdaq Composite and the S&P 500 Over the same period, the fund has recorded an average annual return of 24%, which is also higher than the benchmark indices, and since its inception in 2004, it has posted an average annualized return of 13.6%.
The ETF tracks the performance of the MSCI US Investable Market Index/Information Technology 25/50, which is comprised of large-, mid- and small-cap stocks in the information technology sector, as classified by the Global Industry Classification Standard (GICS). This includes, among others, computer hardware, software, communications equipment and semiconductor companies.
The fund currently holds 321 stocks, with its top three holdings being Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and NVIDIA (NASDAQ:NVDA). Its average price-to-earnings ratio is 36, and as is typical of most Vanguard ETFs, it has a low expense ratio of 0.10%.
Vanguard Russell 1000 Growth Exchange Traded Fund
THE Vanguard Russell 1000 Growth Exchange Traded Fund (NASDAQ:VONG) is another great growth ETF from Vanguard. As the name suggests, it tracks growth stocks in the Russell 1000 index, meaning it includes both large-cap and mid-cap growth stocks, across all sectors.
The FNB holds approximately 442 growth stocks, with an average price-to-earnings ratio of 32. Approximately 55% of the portfolio is in technology stocks, followed by consumer discretionary stocks at 18% and healthcare stocks at 10%.
The top three holdings are the Big Three companies — Microsoft, Apple and NVIDIA — but the fund is more broadly diversified than the Vanguard Information Technology ETF.
Over the past 10 years, the ETF’s average annualized return has been 16.2% as of June 30. Year-to-date, the ETF has generated an average annualized return of 25.4% and an average annualized return of 16.8% since its inception in 2010. It also has a low expense ratio of just 0.08%.
Vanguard Mega Cap Growth ETF
THE Vanguard Mega Cap Growth ETF (NYSEARCA:MGK) could be seen as Vanguard’s answer to the popular Invesco QQQ (NASDAQ:QQQ), which tracks the Nasdaq 100.
THE Vanguard Mega Cap Growth ETF The index does not mirror the Nasdaq 100, but it is also focused on large-cap technology stocks. It tracks the CRSP US Mega Cap Growth Index, which includes the 78 largest growth stocks in the U.S. markets, with a median market capitalization of $1.8 trillion.
About 61% of the portfolio is in technology stocks, 20% in consumer discretionary stocks, and 7% in healthcare stocks. So the top three holdings will be the same as the other two funds on this list. The difference is that this ETF is much more concentrated, with only 78 stocks, which could lead to more volatile returns in the short term. The average price-to-earnings ratio is 38, which is higher than the other two.
But it has had excellent long-term returns, posting an average annualized return of 16.2% over the past 10 years. That’s higher than the S&P 500 and Nasdaq Composite over that period, but just below the Nasdaq 100.
However, year-to-date and for the one-year period ended July 10, it has been the best performer among Vanguard growth ETFs. It returned 26% year-to-date and a whopping 41% for the one-year period ended July 10. Plus, it has a minuscule expense ratio of 0.07%.
Excellent long term options
You really can’t go wrong with any of these great growth funds. However, keep in mind that these are long-term investments that can fluctuate significantly from year to year, depending on the market. But over time, the highs have outweighed the lows, which is reflected in the stellar long-term performance for each of these ETFs.
Investors should be aware, however, that these types of aggressive growth funds should represent only a fraction of a larger, diversified portfolio that is properly balanced to weather market volatility and perform well over time.