If you’re a long-term investor looking to diversify your growth portfolio, there are a number of exchange-traded funds that can help you reach your goals. Exchange-traded funds, or ETFs, are like mutual funds, in that they typically hold multiple securities, but they trade on an exchange like a stock. This makes them very easy to buy and sell, and they generally have low internal expenses as well.
With a single purchase, you can track any number of different sectors or market indices, from international small-cap dividend stocks to the entire U.S. stock market. While there are literally thousands of ETF options, here are 10 that do a great job of covering popular areas of the stock market.
Last updated: March 3, 2021
Vanguard Total Stock Market ETF (VTI)
Stock price as of Feb. 26: $200.08
The Vanguard Total Stock Market ETF is one of the most popular and well-known growth ETFs available. The ETF tracks the CRSP U.S. Total Market index, owning over 3,600 stocks spanning large-, mid- and small-cap categories. Top holdings currently include such well-known names as Apple, Microsoft, Amazon, Alphabet and Facebook. With assets of over $1.1 trillion, the ETF is able to keep expenses extremely low, at just 0.03% of assets annually. Over the last 10 years, the ETF has delivered returns of 13.49% annually.
iShares Core S&P 500 ETF (IVV)
Stock price as of Feb. 26: $381.77
The iShares Core S&P 500 ETF is another popular market-tracking ETF, with assets of over $250 billion. Although this S&P 500 tracker is the littler brother to the SPDR® S&P 500® ETF Trust and its $332 billion, the iShares version has a much lower expense ratio, at 0.03% vs. 0.09%. The ETF attempts to replicate the return of the S&P 500 index, which is often used as a representation of the stock market as a whole. However, the S&P 500 is exclusively a large-cap index, meaning you’ll need to supplement this ETF with additional investments if you want broader exposure to the entire market.
Invesco QQQ Trust (QQQ)
Stock price as of Feb. 26: $314.14
The Invesco QQQ Trust tracks the Nasdaq-100 index, which includes 100 of the largest non-financial companies, both domestic and international, that trade on the Nasdaq composite. There is some overlap between these large-cap companies and those listed on the S&P 500 index, including Apple, Microsoft, Alphabet and Amazon. However, the Nasdaq-100 index, and, by corollary, the QQQ ETF, are more tech-oriented than the S&P 500 index, with over two-thirds of the fund devoted to information technology and communication services. The QQQ Trust was rated the No. 1 best-performing large-cap growth fund over the past 15 years by Lipper, based on the total return through Dec. 31, 2020.
Vanguard Real Estate ETF (VNQ)
Stock price as of Feb. 26: $87.87
The Vanguard Real Estate ETF is not what one would call a “core” holding, but it can be a great diversifier for a portfolio dedicated entirely to growth stocks. Real estate is commonly viewed as a hedge against inflation, and real estate ETFs can also add some income to a growth portfolio. The Vanguard Real Estate ETF currently pays an unadjusted effective yield of 3.31% and has returned 8.67% annually over the past 10 years. The ETF is designed to track the return of the MSCI US Investable Market Real Estate 25/50 Index and owns names such as American Tower, Public Storage and Crown Castle International.
Vanguard Extended Market Index ETF (VXF)
Stock price as of Feb. 26: $177.94
The Vanguard Extended Market Index ETF tracks a benchmark index of small- and mid-size companies. This index, the S&P Completion Index, is so named because it invests in all of the publicly traded stocks that aren’t a part of the S&P 500 index. The fund’s nearly $100 billion in assets is spread among 3,351 stocks, including such well-known smaller names as Square, Zoom, Moderna, Uber and Snap. Over the past 10 years, the ETF has returned 13.36% per year on average.
The Technology Select Sector SPDR® Fund (XLK)
Stock price as of Feb. 26: $130.69
If you’re looking for a little more punch in your growth stock portfolio, take a look at the Technology Select SPDR® Fund. Unlike some of the other ETFs on this list, this ETF is dedicated to a specific sector of the market, rather than tracking a broad market index. As a more narrowly focused ETF, this fund can be more volatile than the broader index funds, but it may also offer the potential for greater returns. Over the past 10 years, the performance of the Technology Select SPDR® Fund has been nothing short of spectacular, posting an average annual gain of 19.27%. However, investors should note that the fund is top-heavy, with just two stocks, Apple and Microsoft, now comprising over 40% of the ETF’s entire portfolio.
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iShares MSCI EAFE ETF (EFA)
Stock price as of Feb. 26: $74.01
For a little more diversification to your growth portfolio, consider an international ETF. The iShares MSCI EAFE ETF owns large- and mid-cap stocks from developed nations spanning Europe, Australia, Asia and the Far East. Since it can be hard for American investors to get enough information to make qualified judgments on individual foreign stocks, owning an ETF can be a great way to get some international exposure without having to make blind guesses about specific companies. However, the iShares MSCI EAFE ETF also owns many names that are familiar to Americans, from Nestle and Toyota to Sony and LVMH, the world’s largest luxury goods conglomerate which is the parent company of Louis Vuitton, Givenchy, Dior and recently acquired Tiffany.
iShares Core MSCI Emerging Markets ETF (IEMG)
Stock price as of Feb. 26: $64.73
The iShares Core MSCI Emerging Markets ETF is a great way to get exposure to regions of the world that would be difficult if not impossible to invest in as an individual. Emerging markets can be high-risk but also offer the potential for outsized returns. Owning these volatile types of investments in an ETF is a way to gain some protection through diversification as well. The iShares MSCI Emerging Markets ETF invests in large-, mid- and small-cap stocks in emerging countries, and it has posted five-year average annual returns of 12.25%. Although the ETF invests in more speculative countries such as Indonesia, Brazil and Saudi Arabia, more than half of the ETF’s assets are invested in China and Taiwan. The expense ratio on this fund is just 0.11%, which is very thrifty for a fund of this nature.
SPDR® Portfolio S&P 500® High Dividend ETF (SPYD)
Stock price as of Feb. 26: $36.82
Growth investors with more of a conservative tilt might want to hang onto shares of the SPDR® Portfolio S&P 500® High Dividend ETF for the long haul. As the name implies, this ETF invests in high-quality companies paying outsized dividends. Specifically, the ETF is designed to replicate the performance of the top 80 high dividend-yielding companies in the S&P 500, such as Valero Energy, Regions Financial Corporation and Seagate Technology. The current dividend yield of the ETF is 4.36%.
Global X Guru Index ETF (GURU)
Stock price as of Feb. 26: $45.85
The Global X Guru Index ETF is a bit of an outlier in this list, and it shouldn’t generally be your only investment. However, as a complement to a more traditional portfolio, the Global X Guru Index ETF has the opportunity to offer additional diversification with the potential for higher returns. The mandate of this ETF is to track the investments of various hedge funds, with the idea being that these investment “gurus” — hence the name of the ETF — are superior investors to the general public. Although investing in this ETF requires a bit of a leap of faith, its returns thus far have been impressive. Since its inception on June 4, 2012, the ETF has returned an average of 14.95% annually.
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