Last year, the value factor snapped its skid against its growth counterpart in significant fashion, but some growth exchange-traded funds were still able to accumulate new assets.
“Large-cap growth mutual funds had $56 billion of net outflows in 2016 with four portfolios shedding $3 billion more in assets according to Thomson Reuters Lipper. Meanwhile, even as adoption of lower-cost ETFs has increased, large-cap growth ETFs gathered just $1.3 billion in new money, according to Factset,” said CFRA Research in a note out Wednesday.
While many growth ETFs languished in their asset-gathering efforts investors sent billions of new dollars into value funds, some growth ETFs remain popular with investors. That includes a pair of low-cost options.
Popularity, At Not A Huge Cost
The Vanguard Growth ETF (NYSE: VUG), which tracks the CRSP US Large Cap Growth Index, saw 2016 inflows of $1.4 billion, according to CFRA. VUG gained just 6.3 percent last year, barely more than half the returns offered by the S&P 500. VUG also significantly trailed its value counterpart, the Vanguard Value ETF (NYSE: VTV), which surged more than 17 percent last year.
VUG is typical of many growth ETFs, as it sports substantial weights to the technology and consumer discretionary sectors. Those sectors combine for over 45 percent of VUG's weight. Top 10 holdings in the Vanguard ETF include venerable growth names such as Amazon.com, Inc. (NASDAQ: AMZN) and Google parent Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL).
VUG holds 323 stocks, and its 0.08 percent annual fee makes it less expensive than 93 percent of competing funds.
Investors allocated $484 million to the Schwab U S Large Cap Growth ETF (NYSE: SCHG) last year. With 429 holdings, SCHG has deeper bench than its Vanguard rival. SCHG tracks the Dow Jones U.S. Large Cap Growth Total Stock Market Index.
SCHG allocates over 47 percent of its combined weight to technology and consumer discretionary stocks. Amazon and Alphabet are also found among this ETF's top 10 holdings, and SCHG features an almost 17 percent weight to healthcare stocks.
SCHG is one of the cheapest growth ETFs on the market with an annual fee of just 0.04 percent, or $4 on a $10,000 investment. The Schwab growth ETF returned 6.8 percent last year.
CFRA has Overweight ratings on both SCHG and VUG. That is the firm's highest fund rating.
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