Unlocking Growth: How a Top ETF Could Transform Your Investment Strategy
Investing in exchange-traded funds (ETFs) represents an easy way to enter the stock market. Purchasing one share of an ETF allows you to invest in dozens or even hundreds of stocks simultaneously.
Some ETFs track major indexes, like the S&P 500 (SNPINDEX: ^GSPC), while others focus on specific market niches. For instance, growth ETFs aim to outperform the market and deliver above-average returns over time.
These investments can be riskier than broad-market funds, but they also have the potential to significantly boost your savings. One particular growth ETF has nearly outperformed the S&P 500 nearly twofold over the last 15 years, suggesting it could turn a monthly investment of $200 into over $1 million. Let’s explore how.
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A Promising Addition to Your Portfolio
If you’re in search of a growth ETF with a solid history, consider the Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG). This fund comprises 231 stocks, nearly half of which belong to the technology sector, with an average market capitalization of about $1.4 billion.
The ETF’s five largest holdings include Nvidia, Apple, Microsoft, Amazon, and Meta Platforms. Together, these stocks account for nearly 40% of the entire fund. The remainder consists of a diverse range of smaller stocks.
All investments here are large-cap stocks (those with a market cap of at least $10 billion). Including a mix of “mega-cap” stocks—companies valued at over $200 billion—can reduce some risks associated with investing in smaller companies, which may be more prone to volatility.
Designed to outperform the market, this ETF has shown impressive results. Since its inception in December 2009, it boasts total returns of about 755%, which is nearly double the S&P 500’s 435% over the same timeframe.
SCHG data by YCharts
It’s important to remember that these past performances do not guarantee future results. Growth ETFs, by nature, can be more volatile, often experiencing sharper drops during market downturns. Investors should be ready for the possibility of significant fluctuations.
Potential Earnings from This ETF
While it’s impossible to predict future investment values, examining historical returns can give a rough idea of your potential earnings.
Since its launch in 2009, the Schwab U.S. Large-Cap Growth ETF has averaged annual returns of 16.22%. If you invest $200 each month, you could amass around $1.33 million after 30 years.
Considering the unpredictable nature of growth ETFs, it’s useful to explore different scenarios. Below is an estimated earning potential based on varying average annual returns.
| Number of Years | Total Portfolio Value: 10% Avg. Annual Return (Market Average) | Total Portfolio Value: 12% Avg. Annual Return | Total Portfolio Value: 14% Avg. Annual Return |
|---|---|---|---|
| 20 | $137,000 | $173,000 | $218,000 |
| 25 | $236,000 | $320,000 | $436,000 |
| 30 | $395,000 | $579,000 | $856,000 |
Data source: Author’s calculations via investor.gov.
Though 16% annual returns are ideal, even a growth ETF that matches the market’s performance could still lead to substantial earnings over time. Slightly outperforming the market can significantly enhance your total gains.
Choosing the right ETF depends on your financial goals and willingness to take risks. A growth ETF might be a great choice for investors aiming to outperform the market with less effort compared to picking individual stocks. However, setting realistic expectations and committing to a long-term investment strategy can help minimize risks while maximizing returns.
A Second Chance at a Valuable Investment Opportunity
If you’ve ever felt like you missed out on investing in successful stocks, here’s your opportunity.
Occasionally, our team of experts issues a “Double Down” stock recommendation for companies they anticipate will soon rise in value. If you think you’ve missed your chance to invest, now might be the best time to consider buying before it slips away. Here are some notable figures:
- Nvidia: If you had invested $1,000 when we doubled down in 2009, it would be worth $378,269!*
- Apple: An investment of $1,000 when we doubled down in 2008 would yield $43,369!*
- Netflix: Investing $1,000 from our 2004 recommendation would give you $476,653!*
Currently, we’re recommending “Double Down” alerts for three promising companies, and this might be an opportunity you don’t want to overlook.
See 3 “Double Down” stocks »
*Stock Advisor returns as of November 18, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, 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.
