Best ETF for Growth Stocks #2 – Vanguard Growth ETF
A big reason we are looking at the best ETF investments over mutual funds is the cost. Expense ratios for some of the best ETFs full of growth stocks run as low as 0.07% annually. While some have lower fees than this next pick, none provide better value than the Vanguard Growth ETF (VUG). It invests in 346 large-cap growth stocks including Apple (AAPL), Google (GOOG) and IBM (IBM).
This bundle of growth stocks is the best ETF for folks who want a more diversified investment. VUG seeks to replicate the performance of the CRSP US Large Cap Growth Index.
The index uses six different factors when ranking large-cap growth stocks. A few are its estimated future growth in earnings, historical earnings and sales growth, the rate at which these growth stocks invest in new assets and the overall return on those assets. The methodology is indeed quite thorough — making this one of the best ETFs.
The typical equity in this group of up and coming stocks has a median market cap of $52 billion, price-to-earnings and price-to-book ratios of 23 and 4.3 respectively, an earnings growth rate of 16.6% annually and a turnover rate of 21%. That means the fund turns the entire portfolio of growth stocks every five years.
Performance also supports that the VUG is one of the best ETF investments for growth stocks. Although the 2008 market correction feels fresh in our minds, this ETF has had eight winning years out of nine since its inception. Investing in growth stocks over the last decade has been rewarding and could become even more so in the years ahead.