Value might be the factor of now right now, but growth has proven itself over many years. Investors can hold the Schwab U.S. Large-Cap Growth ETF (SCHG) for the long-term.
The fund, which is up almost 60% the past year, seeks to track the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. To pursue its goal, the fund generally invests in stocks that are included in the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.
The Dow Jones U.S. Large-Cap Growth Total Stock Market Index includes the components ranked 1-750 by full market capitalization and that are classified as “growth” based on a number of factors.
“Companies within the growth segment offer tremendous profit potential since they are still in the early stages of their life cycle, which in turn also raises the risk level associated with this asset class,” an ETF Database analysis suggested. “Growth stocks may also appeal to those seeking capital appreciation versus dividend income, as these companies re-invest earnings.”
Staying Power for ‘SCHG’?
SCHG holds some heavy hitters that have powered the last decade’s bull run. Those familiar growth names have contributed to the fund’s staying power.
“It contains 235 stocks from some of the largest companies in the U.S., including Apple, Microsoft, Amazon, and Facebook,” wrote Katie Brockman in a Motley Fool article detailing assets that investors can hold for years. “Like the Vanguard fund, this ETF has a low expense ratio of 0.04%. But it doesn’t have quite as long of a track record, as it was established in 2009.”
“Since its inception, though, it has experienced an average annual return of around 17% per year,” Brockman added. “Again, let’s say you’re investing $200 per month in this fund. If you continue earning returns of 17% per year, here’s how much you’d accumulate over time: After 10 years: $54,000; After 20 years: $312,000; After 30 years: $1,554,000.”
In a world where instant gratification constantly tempts investors, those with the wherewithal to buy and hold ETFs like SCHG can win out in the long-term.
“There are never any guarantees when investing, so you may or may not earn these types of returns over the long run,” Brockman wrote. “But by investing consistently and holding these ETFs for as long as you’re able, you can potentially get rich in the stock market.”
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