Investors searching for core growth exchange-traded funds have a plethora of choices at their disposal with small variations in fees, index construction and liquidity.
Often times a large menu of options can lead to indecision when selecting a stalwart mix of stocks to participate in the market. Nevertheless, several ETFs quickly stand out from the group for their low cost, diversification and flexibility.
The Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG) is the cheapest overall option with an expense ratio of 0.07 percent. This means that SCHG will only charge $7 for every $10,000 invested each year.
This ETF contains nearly 400 large-cap stocks that have been identified as exhibiting high growth potential. Top holdings include well-known names such as Apple Inc. and Amazon.com Inc. In addition, SCHG has over $2.1 billion in total assets.
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Over the last year, SCHG has gained 14 percent compared to 9.81 percent in the broad benchmark SPDR S&P 500 ETF (NYSE: SPY). The outsized exposure to technology, consumer discretionary, and health care names has been a tailwind for performance over this time frame.
Another alternative for growth investors is the iShares Core U.S. Growth ETF (NYSE: IUSG). This ETF takes more of a total market approach by incorporating large-, mid- and small-cap holdings in its highly diversified portfolio.
IUSG has nearly $700 million in assets dedicated to 1,870 stocks in a market cap weighted structure. In addition, this fund has a minuscule expense ratio of just 0.09 percent, which makes it suitable for even the most cost conscious investor.
Lastly, the Vanguard Growth ETF (NYSE: VUG) provides exposure to a deep pool of 360 large company stocks that is based on the CRSP US Large Cap Growth Index. Vanguard has always been known for its cost effective funds and VUG doesn’t disappoint with a similar expense ratio of 0.09 percent.
This ETF has accumulated over $19.1 billion in total assets and has a slightly different index construction methodology than typical Dow Jones or Russell Investment brands. The top 10 holdings of this market cap weighted ETF represent 25 percent of the total asset allocation and include outsized positions in Apple and Google Inc.
Disclosure: At the time this article was published, clients of FMD Capital Management owned shares of VUG.
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