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Tech-Heavy Portfolio Boosts Vanguard Growth

Vanguard Growth Index Fund ETF Shares (VUG) employs full replication of the CRSP U.S. Large Cap Growth Index. CRSP defines large cap stocks as those in the largest 85th percentile of the market, suggests fund expert Brian Kelly, editor of MoneyLetter.

It further delineates those stocks based on numerous growth and value characteristics. It allocates half of assets to stocks with the strongest growth characteristics to the above index.

More from Brian Kelly: Top Picks 2020: YCG Enhanced (YCGEX)

The index is market capitalization weighted, meaning the index, and the fund, emphasizes established growth companies. The fund holds 280 stocks, which is a wide diversification.

However, the market capitalization weighing process results in a concentration in its top holdings: Recently, 41% of assets were invested in the top ten names.

The fund tends to be heavy in certain sectors, notably technology. But that is not out of line with the fund’s peers, which also tend to overweight technology and underweight slower-growth sectors such as energy and financial services.

See also: Big Opportunity at Occidental

Its top five holdings of this growth fund are: Microsoft (MSFT); Apple (AAPL); Amazon (AMZN); Facebook (FB); and Alphabet (GOOGL).

Vanguard Growth’s top holdings have been major contributors to overall returns. For example, Microsoft and Apple have gained 64.8% and 111.3%, respectively, over the past year. In 2019, Vanguard Growth ETF returned 37.3%, outpacing nearly 90% of the Morningstar large growth category.

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