All the talk in factor investing circles is whether value can oust growth as the extended bull run gets deeper into its latter stages. While more investors are taking a more defensive posture by allocating their capital into value-oriented funds, there can still be opportunities for growth ETFs to be had.
Here are three funds investors may want to consider to capture growth gains:
SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. The index includes the components ranked 1-750 by full market capitalization and that are classified as “growth” based on a number of factors.
“Schwab’s growth-oriented SCHG fund has rock-bottom 0.04% annual expenses, or just $4 annually in management fees on every $10,000 invested,” wrote Jeff Reeves in U.S. News & World Report. “The fund is admittedly just a vanilla index fund, with a simple screen for growth characteristics and a market-cap weighting that biases toward mega-cap technology stocks like Apple (AAPL) and Microsoft Corp. (MSFT). However, the 365 holdings that include these big tech names have collectively done quite well and delivered impressive 14% gains since Jan. 1 – beating the broader S&P 500 index thanks to its focus on growth.”
VBK seeks to track the performance of a benchmark index that measures the investment return of small-capitalization growth stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Growth Index, a broadly diversified index of growth stocks of small U.S. companies.
“Bigger isn’t always better if you really want growth. That’s because while some of these large tech stocks undoubtedly offer scale, the truth is that their fastest growth is in the rearview mirror now that they are pushing $1 trillion in market value,” wrote Reeves. “If you’re an investor really seeking growth, consider getting in on the ground floor with this Vanguard small-cap fund comprised of more than 620 smaller-sized U.S. stocks, all of which have growth characteristics.
MDYG tracks the total return performance of the S&P MidCap 400 Growth Index. The index tracks the performance of medium capitalization exchange traded U.S. equity securities exhibiting “growth” characteristics.
“For investors looking to split the difference, this SPDR fund focuses on mid-sized corporations by applying growth screening methodology to the S&P 400,” wrote Reeves. “If you’re unfamiliar, that’s the middle slice of the top 1,500 U.S. corporations – with the S&P 500 index representing the large-cap companies, the 400 index representing the next 400 and the 600 index representing the bottom tier.”
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