Best ETF for Growth Stocks #1 - First Trust US IPO Index Fund
One obvious place to look for growth stocks is the IPO market, considering most new-to-the-market companies are naturally up and coming stocks. That makes the best ETF for growth stocks the First Trust US IPO Index Fund (FPX). The fund’s top 10 holdings account for nearly half of its portfolio, and the top three growth stocks in the fund are Facebook (FB), AbbVie (ABBV), and General Motors (GM).
This is one of the best ETF investments because it tracks the performance of the IPOX-100 US Index, which represent 100 of the largest, best-performing U.S. IPOs during their first 1,000 trading days.
In the past five years FPX has achieved an annualized return of almost 30%. Given that performance, the expense ratio of 0.60% is reasonable for this bundle of hot up and coming stocks. Plus, it’s one of the best ETF picks for growth stocks since Morningstar rates it five stars over three- and five-year periods.
In terms of sector exposure, consumer discretionary growth stocks account for the biggest weighting at 26% of the fund, followed by information technology, energy and health care, respectively. These four sectors represent 79% of the growth stocks in FPX’s 100-stock portfolio. Generally, a portfolio of growth stocks is going to have significant representation from all four of these sectors.
When it comes to funds focusing on growth stocks, FPX has to be considered one of the best ETF investments out there.