Unlocking Growth: The Top ETF to Consider in Today’s Bull Market
Growth stocks have experienced remarkable gains this year as investors show confidence in an improving economy and advancements in artificial intelligence (AI). This surge has propelled the S&P 500 to a 23% increase over the last 10 and a half months. The index confirmed its bull market status earlier this year, further boosting investor enthusiasm and their desire for growth stocks.
Typically, companies that prioritize growth perform well during bull markets, making them appealing options for investors. Since we advocate long-term investing, holding onto these stocks could lead to significant rewards over time.
As we seek to capitalize on today’s bullish climate, it’s wise to consider several quality growth investments—all with a single strategy. By investing in an exchange-traded fund (ETF), which contains a variety of stocks centered on a specific theme—growth in this case—you can easily diversify your portfolio. Let’s explore the leading mega-cap growth ETF you should consider today, especially if you’re planning to invest $500 (or even less).
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One Investment, Many Stocks: The Power of ETFs
Let’s first discuss ETFs. As mentioned, these funds hold multiple stocks, granting you exposure to leading companies across various sectors. ETFs can replicate a major index like the S&P 500, track specific industries like consumer goods, or focus on growth and dividend-paying companies. Since ETFs trade daily like stocks, you have the flexibility to buy or sell them easily. Investing in an ETF provides a convenient way to access the top companies in a specific category without needing to be an expert in that field.
One key point to remember is that ETFs charge management fees, known as expense ratios. To maximize your returns, aim for ETFs with an expense ratio below 1%.
Now, for the standout growth ETF of the moment, consider the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK). With an impressive expense ratio of 0.07% and a current trading price of about $330, this fund is accessible and includes many of the top growth stocks that have been driving the market’s progress this year, indicating strong potential for future growth.
The technology sector currently dominates the Mega Cap ETF, making up 61% of its holdings. This fund follows the CRSP U.S. Mega Cap Growth Index, meaning it adjusts its investments based on which industries are performing best at any given time. This approach allows you to maintain exposure to the market’s leading growth companies, no matter the sector shifts.
Current Top Holdings of the ETF
The ETF’s composition reflects the most promising growth stocks available. Presently, its largest holdings—including Apple, Nvidia, and Microsoft—each represent over 12% of the fund.
However, don’t mistake this ETF for being solely technology-focused. It encompasses stocks from 10 different industries, enhancing its diversification. Other notable stocks in the fund include the pharmaceutical leader Eli Lilly and electric vehicle innovator Tesla.
This diversified strategy has proven effective, as indicated by the Mega Cap ETF’s projected increase of 27% in 2024, outpacing the anticipated S&P 500 gains. Over the past decade, the ETF’s performance has outdone the S&P 500 substantially, with a gain of 300% compared to the S&P 500’s roughly 187% growth.
Clearly, investing in the Mega Cap ETF is an efficient way to gain quick access to a well-rounded collection of top growth stocks. These stocks hold the potential to provide returns not only during this bull market but well into the future.
Is Investing $1,000 in the Vanguard Mega Cap Growth ETF a Smart Move?
Before you decide to invest in the Vanguard Mega Cap Growth ETF, consider this:
The Motley Fool Stock Advisor analyst team has recently identified their selection of the 10 best stocks for investors right now. Notably, the Vanguard Mega Cap Growth ETF is not included in this list. These chosen stocks are projected to yield significant returns in the coming years.
For instance, if you had invested $1,000 in Nvidia when it was recommended on April 15, 2005, it would now be worth over $870,068!*
The Stock Advisor offers investors a straightforward path to success, providing portfolio-building strategies and regular updates along with two new stock recommendations each month. Since its inception, the Stock Advisor has outperformed the S&P 500 by more than four times.*
Explore the 10 stocks »
*Stock Advisor returns as of November 18, 2024
Adria Cimino has positions in Tesla. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
