Is This Growth ETF a Millionaire Maker? Here's What History Suggests.

U.S. growth stocks like the "Magnificent Seven" and the artificial intelligence (AI) trade have been big moneymakers for investors in recent years. But some investors worry that large-cap growth stocks are overvalued and at risk of a downturn. What if there were another way to invest in growth stocks?

The Vanguard S&P Mid-Cap 400 Growth ETF (NYSEMKT: IVOG) could be worth considering for growth-focused investors. This exchange-traded fund (ETF) offers a portfolio of 245 stocks of mid-cap companies with a median market cap of $14.2 billion. In the past nearly 16 years since this fund's inception in September 2010, it has delivered average annual returns of 12.31%.

Those returns are good enough to make you a millionaire, but there are a few important details to keep in mind. Let's look at this Vanguard ETF and see if it's a good choice for your portfolio.

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What is the Vanguard S&P Mid-Cap 400 Growth ETF?

If you're worried that major tech names are too richly valued and unlikely to deliver such strong returns in the future, buying mid-cap growth stocks could offer a different path forward. The Vanguard S&P Mid-Cap 400 Growth ETF holds a portfolio of lesser-known, fast-growing, smaller companies.

Instead of the Magnificent Seven or major tech stocks, this growth ETF's top holdings include:

• Twilio (a communications technology stock): 1.64% of the fund
• Curtiss-Wright (a defense stock): 1.46%
• nVent Electric (an industrial stock involved with liquid cooling solutions for AI workloads): 1.44%
• ATI (a specialty materials company involved in aerospace and defense): 1.41%
• TechnipFMC (an energy stock; this company makes equipment for the oil and gas industry): 1.38%

This is a different mix of stocks than you would get from a typical S&P 500 index fund. And even if you haven't heard of most of these names, these mid-cap growth companies might grow to become household names in the future.

Is IVOG a millionaire-maker ETF?

This growth stock ETF has a strong track record, with 12.31% average annual returns for the past 15 years. With the power of compounding growth, that level of return could make you a millionaire.

Let's say you invest $500 per month in the Vanguard S&P Mid-Cap Growth ETF, and your investment grows at that same average rate of 12.31% per year. After 15 years, you'd have $229,339. After 20 years, you'd have $448,151. After 25 years, you'd have $839,138. And after 27 years, you'd have over $1 million.

There's no guarantee that this growth ETF will keep delivering this same high level of returns into the future. Large-cap stocks or value stocks might outperform it. But if you want to invest in a different part of the market that still offers high growth potential, the Vanguard S&P Mid-Cap 400 Growth ETF could be worth a look.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ati, Curtiss-Wright, and Twilio. The Motley Fool has a disclosure policy.