Wall Street Wins for 3 Straight Weeks: 5 ETFs Near 52-Week High
Wall Street logged the third consecutive week of gains, with November becoming the strongest month of the year. The retreat in bond yields, on continued hopes that the Fed’s aggressive interest rate hiking campaign might be nearing an end, has been a significant contributor to the stock rally.
The tech-heavy Nasdaq Composite Index is the outperformer this month, climbing 9.9%, while the S&P 500 Index and the Dow Jones have risen 7.6% and 5.7%, respectively. With this surge, many ETFs have hit new 52-week high lately or are near their one-year peak. Growth ETFs have taken charge. We have highlighted five ETFs that offer broad exposure to the stock market and have a solid Zacks ETF Rank #2 (Buy), suggesting their continued outperformance in the weeks ahead (read: ETFs to Ride on S&P 500's Longest Winning Streak Since 2021).
These include Invesco Large Cap Growth ETF PWB, Invesco NASDAQ 100 ETF QQQM, iShares Russell Top 200 Growth ETF IWY, Schwab U.S. Large-Cap Growth ETF SCHG and Vanguard Growth ETF VUG.
Inside Growth Investing
Growth stocks refer to high-quality stocks that are likely to witness revenue and earnings increase at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in higher share prices. As such, growth funds tend to outperform during an uptrend. However, these funds offer exposure to stocks with comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility especially compared to value stocks.
Market Trends
The Fed voted to hold interest rates at their highest range in 22 years at the conclusion of its latest policy meeting. Investors bet that the central bank may be done hiking. The latest round of data points has also strengthened the idea that the Fed is done with rate hikes.
Inflation and job growth slowed in October, indicating that the Fed is done hiking interest rates and could potentially start cutting them next year. The unemployment rate ticked higher as auto strikes weighed on the labor market last month. A continued high level of unfilled job openings and solid private sector balance sheets indicate a “soft” economic landing.
Additionally, the fall in oil prices has lent support to the stock market upturn. Concerns about demand, especially from China and the United States, have led to a decrease in oil prices, which in turn could help to ease inflation worries and bolster investor confidence (read: Oil Falls Below $80: ETF Areas to Win/Lose).
Further, better-than-expected earnings added to the strength. With more than 92% of the third-quarter results already out, earnings are poised to grow despite the significant energy sector drag, which follows three back-to-back quarters of declines.
ETFs At or Near 52-Week High
Invesco Large Cap Growth ETF (PWB)
Invesco Large Cap Growth ETF offers exposure to the growth segment of the large-cap U.S. stock market. It tracks the Dynamic Large Cap Growth Intellidex Index, holding well-diversified 51 stocks in its basket. Information technology takes the largest share at 31.2%, followed by 18.4% in consumer discretionary and 13.4% in industrials.
Invesco Large Cap Growth ETF has amassed $688.7 million in its asset base and charges 56 bps in annual fees. It trades in average volume of 27,000 shares.
Invesco NASDAQ 100 ETF (QQQM)
Invesco NASDAQ 100 ETF is an identical to Invesco QQQ QQQ, tracking the NASDAQ-100 Index. However, it has lower annual fees of 15 bps. It holds 103 securities in its basket, with a higher concentration on the top two firms (read: Growth ETFs to Shine as Fed Hints at End of Rate Hike Era).
Invesco NASDAQ 100 ETF has accumulated $16 billion in its asset base. It trades in an average daily volume of 1.4 million shares.
iShares Russell 1000 Growth ETF (IWF)
iShares Russell 1000 Growth ETF provides exposure to large and mid-capitalization U.S. equities that exhibit growth characteristics by tracking the Russell 1000 Growth Index. iShares Russell 1000 Growth ETF holds 443 securities in its basket with a tilt toward the information technology sector, while consumer discretionary, communication and healthcare receive double-digit exposure each.
With AUM of $76.5 million, iShares Russell 1000 Growth ETF trades in heavy volume of around 1.3 million shares a day on average and charges 19 bps in annual fees.
Schwab U.S. Large-Cap Growth ETF (SCHG)
With AUM of $21.2 billion, Schwab U.S. Large-Cap Growth ETF follows the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 254 stocks in its basket, with a large concentration on the top two firms. From a sector look, information technology takes the top spot at 43.9% share, while health care, consumer discretionary and communication services receive double-digit exposure each in the portfolio.
Schwab U.S. Large-Cap Growth ETF charges 4 bps in annual fees and sees an average volume of around 1.2 million shares a day.
Vanguard Growth ETF (VUG)
Vanguard Growth ETF offers exposure to the growth segment of large-cap equities and follows the CRSP US Large Cap Growth Index. Vanguard Growth ETF holds 221 stocks in its basket, with none accounting for more than 13% share. Technology dominates the fund’s portfolio at 53.1%, while consumer discretionary and industrials round off the next two sectors with a 21% and 8.8% share, respectively.
Vanguard Growth ETF has AUM of $97.9 billion and an average daily volume of 906,000 shares. It charges 4 bps in fees per year.
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Invesco QQQ (QQQ): ETF Research Reports
Invesco Large Cap Growth ETF (PWB): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
iShares Russell Top 200 Growth ETF (IWY): ETF Research Reports
Schwab U.S. Large-Cap Growth ETF (SCHG): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
