Best Growth ETFs for 2024

Jitanchandra Solanki
11 Min read

Growth investing exists as an investment strategy such as value investing and dividend investing. What exactly investing in growth ETFs means, which growth ETFs to keep on your watch list, and some pros and cons of investing in growth ETFs are covered in this article.

What are Growth ETFs?

Investing in growth means adding companies to a portfolio which are primed to grow at a pace much faster than the market average. Growth investing is different from value investing, where investors aim to invest in companies that have already reached a sizeable market capitalisation and have proven to be profitable businesses.

An exchange-traded fund (ETF) is an investment product that allows investors to buy many different stocks at once. The underlying stocks, belonging to many different companies, are invested by the fund whenever investors buy into the ETF itself. Investing in a growth ETF is therefore a way of adding a growth tilt to an investment portfolio.

Buying growth ETFs often means investing in businesses that are yet to capture the chunk of market share they’re after. Growth investors look for companies which they believe will, after a given number of years of rapid growth start to dominate the market, by which point their early investment will - hopefully - have grown in tandem.

Best Growth ETFs to Watch

Readers should be reminded that the ‘best’ growth ETF is not necessarily the same for each investor. Investors should consider their personal financial situation and perform their own research to see which growth ETF best fits their portfolio.

  1. Vanguard Growth ETF – Large Capitalization U.S. Growth Companies, Heavy on Tech
  2. Vanguard S&P 500 Growth ETF – Large Capitalization U.S. Growth Companies 
  3. Schwab U.S. Large Cap Growth ETF – Large Capitalization U.S. Growth Companies, Many in Tech 
  4. iShares Russell Mid-Cap Growth ETF – Medium Capitalization U.S. Growth Companies 
  5. iShares Core Dividend Growth ETF – U.S. Companies with a History of Dividend Growth 

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Vanguard Growth ETF 

The Vanguard Growth ETF aims to offer investors exposure to the largest growth stocks on the US stock market. Well-known businesses like Apple and Google are included, as are many other tech companies. With slightly over half of this fund’s capital being invested in technology companies, it is especially suited to investors who want to include both growth and technology ETFs in their investing portfolio.

The top 10 holdings of the Vanguard Growth ETF are in order of size Apple Inc. (12.8%), Microsoft Corp. (11.8%), Amazon.com Inc. (5.9%), NVIDIA Corp. (~5.1%), Alphabet Inc. Class A (~3.9%), Tesla Inc. (~3.4%), Facebook Inc. Class A (~3.4%), Alphabet Inc. Class C (~3.3%), Eli Lilly & Co. (~2.3%), and Visa Inc. Class A (~1.8%).

The Vanguard Growth ETF covers several different economic sectors, most notably Technology with around 53% of its capital. The next sectors are consumer discretionary (21%), industrials (~9%), and healthcare (8%). Other sectors are covered with smaller chunks of the fund’s capital.

With Admirals, you can trade the Vanguard Growth ETF CFD. CFDs, or contracts for difference, are derivative contracts that track the underlying price of an asset. This enables investors to trade long and short using leverage. Learn more in The CFD Trading Guide.

Vanguard S&P 500 Growth ETF

The Vanguard S&P 500 Growth ETF tracks the Standard & Poor’s Growth Index, which is an index composed of the growth companies within the S&P 500. With a focus on growth over the long term, the fund holds no bonds or investment products besides the stocks included in the index.

The top 10 holdings of Vanguard S&P 500 Growth ETF are in order: Apple Inc. (~13%), Microsoft Corp. (~7.8%), NVIDIA Corp. (~5.5%), Alphabet Inc. Class A (~3.8%), Alphabet Inc. Class C (~3.2%), Tesla Inc. (~3.2%), Amazon.com Inc. (~2.9%), UnitedHealth Group Inc. (~2.5%), Eli Lilly & Co (~2.3%).

The Vanguard S&P 500 Growth ETF covers several different economic sectors, namely: information technology (~37%), healthcare (~17%), consumer discretionary (~10%), and financials (~8%). Other sectors with smaller capital allocations include communication services (~7%), energy (~6%), and industrials (~5%). With Admirals, you can trade the Vanguard S&P 500 Growth ETF CFD.

Schwab U.S. Large Cap Growth ETF

The Schwab U.S. Large Cap Growth ETF has a focus on growth stocks with a large market capitalisation from the U.S. stock market. According to the issuer, this fund is suitable for being a part of a diversified portfolio and notably features an expense ratio of 0.040%. Schwab is an American multinational financial services company that issues many different ETFs and investment products.

The 10 largest holdings of the Schwab U.S. Large Cap Growth ETF are Microsoft Corp. (~12.5%), Apple Inc. (~12.2%), Amazon.com Inc. (~6.1%), NVIDIA Corp (~5.8%), Alphabet Inc. Class A (~3.7%), Meta Platforms Inc. Class A (~3.6%), Alphabet Inc. Class C (~3.1%), Tesla Inc. (~3%), Eli Lilly & Co (~2.3%), UnitedHealth Group Inc. (2.2%).

The main economic sectors which the Schwab U.S. Large Cap Growth ETF covers are information technology (~44%), healthcare (~13%), communication services (~13%), and consumer discretionary (~13%). Other sectors with smaller capital allocations are financials (~7%) and industrials (~3%), among others. With Admirals, you can trade the Schwab U.S. Large Cap Growth ETF CFD.

iShares Russell Mid-Cap Growth ETF

The iShares Russell Mid-Cap Growth ETF gives investors exposure to several mid-capitalisation U.S. growth stocks from the Russell Midcap Index and is suitable for investors looking to add a growth tilt to their portfolio. This fund is issued by BlackRock, the world’s largest investment manager.

The largest holdings of the iShares Russell Mid-Cap Growth ETF are in order of the amount of capital allocated: CrowdStrike Holdings Inc. Class A (1.8%), Apollo Global Management Inc. (~1.6%), Dexcom Inc. (~1.6%), Cintas Corp. (~1.5%), Idexx Laboratories Inc. (~1.5%), Ross Stores Inc. (~1.4%), Copart Inc. (~1.3%), Cheniere Energy Inc. (~1.3%), Ameriprise Finance Inc. (~1.3%), and Paychex Inc. (~1.3%).

The economic sectors covered by the iShares Russell Mid-Cap Growth ETF are in order: information technology (~23%), industrials (~19%), healthcare (~19%), consumer discretionary (~13%), and financials (~11%). Other sectors include communication (~4%), and energy (~4%), among others. With Admirals, you can trade the iShares Russell Mid-Cap Growth ETF CFD.

iShares Core Dividend Growth ETF

The iShares Core Dividend Growth ETF aims to offer investors exposure to U.S. stocks belonging to companies that have a history of sustained dividend growth. This makes the fund different from a growth ETF, as companies that pay dividends are usually past what most would consider the ‘growth’ stage. However, the ability to increase their dividend payments over a longer period is to some investors a sign that these companies are still growing, and doing so at a sustainable rate.

The largest holdings of the iShares Core Dividend Growth ETF are JPMorgan Chase & Co (~3%), Microsoft Corp. (~2.9%), Exxon Mobil Corp. (~2.8%), Johnson & Johnson (~2.8%), Abbvie Inc. (~2.7%), Broadcom Inc. (~2.7%), Chevron Corp. (~2.7%), Apple Inc. (~2.7%), Procter & Gamble (~2.1%), and Home Depot Inc. (~2.1%).

The main economic sectors represented within the iShares Core Dividend Growth ETF are financials (~18%), healthcare (~18%), information technology (~17%), industrials (~12%), and consumer staples (~11%). Other sectors like energy (~7%), utilities (~6.7%), and consumer discretionary goods (~6%) take up a large portion of the remaining capital. With Admirals, you can trade the iShares Core Dividend Growth ETF CFD

How to Invest in Financial ETFs

With Admirals, you can trade and invest in numerous stocks and growth ETFs from all around the world, with the following commissions:

  • UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
  • US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
  • France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.

You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:

  1. Open an account with Admirals.
  2. Click on Trade on one of your live or demo trading accounts to open the web platform.
  3. Search for your symbol at the top of the search window.
  4. Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Source: Example of a chart and trading ticket from the Trade.MT5 web trading platform. Illustrative purposes only. Date captured: 31 January 2024.

 

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Conclusion: Pros & Cons of Growth ETFs

In terms of advantages, growth ETFs offer investors a way to potentially grow their portfolio over the long term with companies that, hopefully, manage to conquer a significant market share in the future. Growth companies are companies which are growing rapidly or are expected to grow rapidly in the coming years.

Often the way these companies manage to grow rapidly is because they develop innovative technologies or products that give them a competitive advantage against their competitors. In theory, a company with the proprietary knowledge of how to build in-demand products is better able to outlive their competitors.

In terms of disadvantages, the stocks of growth companies tend to be more volatile than the market average, meaning they are associated with more risk and downside potential. Investors who invest into growth ETFs should be mindful of the possibility of a heavier than usual drawdown for their portfolio.

Another disadvantage is the lack of dividend payments with growth ETFs. Growth companies tend to reinvest their earnings into expanding their business operations, leaving little room to directly reward investors with a dividend. This means the returns generated by a portfolio with growth ETFs can be more uncertain than those of a dividend portfolio.

Continue Reading:

FAQs on Best Growth ETFs

 

What is a growth ETF?

A growth ETF is an Exchange-Traded Fund that has a focus on growth stocks. ETFs are investment products that investors can buy to gain exposure to many different stocks at the same time. For a growth ETF, these are growth companies that consumers expect to sustain rapid long-term growth and secure a substantial market share in the future.

 

What are the best growth ETFs?

Determining the best growth ETF is subjective and varies based on individual investors. A few growth ETFs to watch include the Vanguard Growth ETF, Vanguard S&P 500 Growth ETF and the Schwab U.S. Large Cap Growth ETF.

 

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4. The Analysis is prepared by an independent analyst (Jitanchandra Solanki, hereinafter “Author”) based on personal estimations.

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