5 Growth ETFs to Own as the Nasdaq Hits All-Time Highs
Key Points
The Invesco QQQ Trust has been a top growth ETF performer, while the Vanguard Morningstar Growth ETF and Schwab U.S. Large-Cap Growth ETF aren't far behind.
The Vanguard Information Technology ETF and Global X Artificial Intelligence & Technology ETF are two top sector funds to consider.
- 10 stocks we like better than Vanguard Morningstar Growth ETF ›
The Nasdaq Composite (NASDAQINDEX: ^IXIC) hit a new all-time high this week, as investors continue to pour into technology and growth stocks. While value stocks have outperformed this year, growth stocks have dominated the market since the housing collapse in 2008.
Since that bear market, growth stocks, as represented by the Vanguard Morningstar Growth ETF (NYSEMKT: VUG), have outperformed value stocks, as represented by the Vanguard Morningstar Value ETF (NYSEMKT: VTV), in 14 of the past 17 years.
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|
Year |
Vanguard Growth ETF Return |
Vanguard Value ETF Return |
|---|---|---|
|
2025 |
19.4% |
15.3% |
|
2024 |
32.6% |
15.9% |
|
2023 |
46.9% |
9.3% |
|
2022 |
(33.1%) |
(2%) |
|
2021 |
27.2% |
26.4% |
|
2020 |
40.3% |
2.3% |
|
2019 |
37.3% |
25.8% |
|
2018 |
(3.4%) |
(5.5%) |
|
2017 |
27.8% |
17.4% |
|
2016 |
6.2% |
17% |
|
2015 |
3.3% |
(0.9%) |
|
2014 |
13.6% |
13.2% |
|
2013 |
32.4% |
33.1% |
|
2012 |
17% |
15.2% |
|
2011 |
1.8% |
1.1% |
|
2010 |
17.2% |
14.5% |
|
2009 |
36.1% |
19.9% |
Data source: Vanguard.
Given that strong track record, let's look at five top growth exchange-traded funds (ETFs) to buy right now.
1. The Invesco QQQ Trust
The Invesco QQQ Trust (NASDAQ: QQQ) tracks the tech-heavy Nasdaq-100 index, which consists of the 100-largest non-financial stocks that trade on the Nasdaq exchange. The index is dominated by top tech names, and the ETF has a strong history of outperformance.
The fund has generated an average annual return of 20.8% over the past decade, while topping the S&P 500 (SNPINDEX: ^GSPC) more than 88% of the time on a 12-month rolling basis. That's impressive.
2. The Vanguard Morningstar Growth ETF
The Vanguard Morningstar Growth ETF is another great growth index ETF to buy. It essentially tracks the growth side of the S&P 500 and holds 147 stocks. The fund is heavily concentrated, with its top five holdings -- Nvidia, Apple, Microsoft, Alphabet, and Amazon -- making up more than 50% of its holdings.
The ETF has been a strong performer over the years, with an average yearly return of 17.8%. It also has a minuscule expense ratio of just 0.03%.
3. The Schwab U.S. Large-Cap Growth ETF
The Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) is another top growth ETF to consider. It mimics the Dow Jones U.S. Large-Cap Growth Total Stock Market index and has a scant 0.04% expense ratio. It holds around 190 stocks, with technology once again being its highest concentration.
The fund has been a strong performer over the years, averaging a robust 18.7% return over the past 10 years. That's solidly ahead of the Morningstar large-cap growth category average of 15.9%.
4. The Vanguard Information Technology ETF
With technology stocks the main engine behind the outperformance of growth stocks, investing in a technology-focused ETF makes sense. One to consider is the Vanguard Information Technology ETF (NYSEMKT: VGT), which tracks the MSCI US Investable Market Information Technology 25/50 index.
Nvidia is a huge position in the fund, making up about 17.7% of its portfolio, while Apple is not far behind at 15.8%. That kind of conviction is normally reserved for hedge funds, but if you wanted to bet heavily on two stocks, those are two great choices. Nvidia remains the king of AI infrastructure, while Apple has one of the best compounding business models on the planet.
The ETF has put up some great numbers over the year, with a 24.5% annual average return over the last 10 years. Its 0.09% expense ratio is a little higher than some Vanguard funds, but it remains low.
Image source: Getty Images.
5. Global X Artificial Intelligence & Technology ETF
Delving into an even more specific investment category, the Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ) is a top option for investors looking for an AI-focused fund. The ETF invests in stocks that are looking to develop and utilize AI, and its investments are spread out among software, semiconductor, and other industries. Over 30% of its portfolio is also in international stocks.
The ETF has been a huge winner over the past three years, with a yearly average return of nearly 33%.
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Geoffrey Seiler has positions in Alphabet, Amazon, and Invesco QQQ Trust. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, Vanguard Morningstar Growth ETF, and Vanguard Morningstar Value ETF. The Motley Fool has a disclosure policy.
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