Reaping Rewards in a Bull Market: Why the Vanguard S&P 500 Growth ETF is Your Best Bet

The stock market has seen impressive gains this year. The S&P 500 confirmed it was in a bull market back in January and has set multiple record highs since then. History indicates that bull markets typically endure longer than bear markets, suggesting this upward trend could persist.

Choosing Growth Stocks in a Bullish Environment

When considering investments, growth stocks often lead in optimistic market conditions, and this trend is evident now. Investors have the option to select various growth stocks for their portfolios. However, there is also a straightforward way to tap into these high-potential assets: by investing in a growth-focused index fund.

A prime example is the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG). This exchange-traded fund (ETF) tracks the S&P 500 Growth Index, which is made up of growth stocks from the S&P 500. Notably, you can invest in this ETF with less than $500, making it an appealing choice for many investors looking to enhance their portfolio.

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Understanding ETFs: Simple Yet Effective

First, let’s clarify what ETFs are. They are not as complicated as they seem. ETFs trade throughout the day like stocks, making investing accessible. One important factor to consider before purchasing an ETF is its expense ratio, which represents the fees associated with owning the fund. Ideally, you want to choose an ETF with an expense ratio of less than 1% to ensure that costs do not significantly reduce your returns over time.

Investing in an ETF allows you to gain exposure to a diverse collection of stocks related to a specific theme, whether it is an investment style, an industry, or an index. While individual stock picking is still valuable, adding a few ETFs to your portfolio can enhance your overall investment strategy.

A Look at Today’s Top Growth Stocks

Now, focusing on the Vanguard S&P 500 Growth ETF, we see that it emphasizes growth stocks, particularly in the information technology sector, which accounts for nearly 50% of the ETF’s holdings. Major players like Apple, Microsoft, and Nvidia make up over 12%, 11%, and 10% of the fund, respectively. Technology stocks have historically been strong performers, and the current boom in artificial intelligence (AI) has further accelerated this trend, benefiting investors significantly.

While technology dominates the ETF, it also provides diversification — a major advantage of investing in an ETF. This diversification means if one industry or stock faces challenges, other sectors can help balance your portfolio. The Vanguard fund incorporates 10 additional industries, with communication services and consumer discretionary also featuring prominently.

Keep in mind that the industry weightings can shift with market changes. Investing in this ETF ensures you’re always aligned with the leading growth stocks.

Currently, the Vanguard fund is trading at approximately $358. Therefore, investors can buy a share for under $500 or, if financially feasible, purchase a larger stake. The fund has increased by 32% this year, outperforming the S&P 500 which has risen by 24%. As the bull market persists, the ETF has considerable potential for further growth and will likely enhance your long-term investment strategy.

Your Chance at a Lucrative Opportunity

Do you worry about missing out on buying into acclaimed stocks? If so, this information is worth paying attention to.

Occasionally, our team of expert analysts identifies a “Double Down” stock, recommending companies they believe are poised to surge. If you think you’ve missed your opportunity to invest, now is an excellent moment to act.

• Amazon: A $1,000 investment from our doubled down recommendation in 2010 would now be worth $23,446!*
• Apple: A $1,000 investment from our doubled down recommendation in 2008 would now be worth $42,982!*
• Netflix: A $1,000 investment from our doubled down recommendation in 2004 would now be worth $428,758!*

At this moment, we are providing “Double Down” alerts for three exceptional companies, and another opportunity may not come around soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 4, 2024

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. 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.