“CRSP classifies growth securities using the following factors: future long-term growth in earnings per share (EPS), future short-term growth in EPS, 3-year historical growth in EPS, 3-year historical growth in sales per share, current investment-to-assets ratio, and return on assets,” according to a Seeking Alpha analysis of VBK.

Cyclical stocks, like materials, industrials, energy and technology companies, are more economically sensitive and do well when the economy is improving. With the Federal Reserve set to hike rates, the rising rate environment would signal a better economic outlook.

Cyclical sectors, which are heavily represented in VBK, currently trade at a discount to the broader market. In addition to its large combined weight to industrial and technology stocks, consumer discretionary names command over 15.5% of VBK’s weight.

Vanguard Small-Cap Growth ETF