Growth stocks are loosely defined as those with higher-than-average earnings growth rates, although the precise definition of a growth stock can vary. Investors choose growth stocks because of their potential for market-beating returns, and it's not hard to see why. After all, investors who bought shares of growth stocks Netflix and Tesla just five years ago are currently sitting on gains of 892% and 459%, respectively.

The downside is that growth stocks tend to be more volatile, and therefore more risky, than value stocks. One solution to this problem is to diversify your growth stock investments by purchasing an exchange-traded fund that invests in hundreds of different fast-growing companies. There are growth ETFs to fit any growth investor's risk tolerance and investment goals, so here are seven great choices to help you start your search, followed by a brief discussion of each one.

When searching for the best growth ETFs, I look for a few different things. First, there are several types of growth funds -- for example, they may focus on large-, medium-, or smaller-sized companies. Many growth ETFs focus on U.S. stocks, while some buy international growth stocks.

I also look for a reasonably low expense ratio. If you aren't familiar, an ETF's expense ratio is the annual investment fee shareholders pay, expressed as a percentage of the fund's assets. When it comes to index funds, I generally want to see expense ratios of 0.25% or less, although there are some exceptions. For example, international ETFs tend to have slightly higher-than-average expense ratios.

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ETF Name (Symbol)

Recent Share Price

Dividend Yield

Expense Ratio (Gross)

iShares Russell 1000 Growth ETF (NYSEMKT:IWF)

$138.20

1.13%

0.20%

Vanguard Growth ETF (NYSEMKT:VUG)

$143.86

1.11%

0.06%

Vanguard Dividend Appreciation ETF (NYSEMKT:VIG)

$102.43

1.87%

0.08%

iShares Russell 2000 Growth ETF (NYSEMKT:IWO)

$194.98

0.70%

0.24%

Vanguard Mid-Cap Growth ETF (NYSEMKT:VOT)

$130.29

0.73%

0.07%

Vanguard Mega Cap Growth ETF (NYSEMKT:MGK)

$114.04

1.22%

0.07%

iShares MSCI EAFE Growth ETF (NYSEMKT:EFG)

$81.33

1.55%

0.40%

Data Source: TD Ameritrade. Prices, yields, and expense ratios current as of April 16, 2018.

1. iShares Russell 1000 Growth ETF

As the name implies, the iShares Russell 1000 Growth ETF tracks the Russell 1000 Growth Index, which is an index of large- and mid-cap stocks. Specifically, the Russell 1000 index consists of the 1,000 largest companies in the Russell 3000 index, which is widely thought of as an excellent total-stock market index, as it contains companies of all industries, in a wide variety of sizes. Within the Russell 1000 Index there are both growth and value stocks, and the Russell 1000 Growth ETF focuses on the 552 stocks that exhibit "growth characteristics," based on the stock's price-to-book ratio, medium-term growth forecast, and historical growth rates.

As with most indexes, the Russell 1000 Growth Index's components are weighted by market capitalization, meaning that stocks with larger market caps have a bigger effect on the index's performance. For example, even though the ETF owns 552 stocks, nearly 6.6% of its assets are invested in Apple, because the company has the world's greatest market cap. Other top holdings of the fund include tech heavyweights Microsoft, Amazon.com, Facebook, and Alphabet.

In a nutshell, the iShares Russell 1000 Growth ETF is a good choice for investors who want broad exposure to larger growth stocks in their portfolio. It allows investors to focus on the largest U.S. growth stocks while maintaining a high level of diversification thanks to the portfolio of more than 550 stocks.

2. Vanguard Growth ETF

Like all other Vanguard ETFs, the Vanguard Growth ETF offers a rock-bottom expense ratio: just 0.06%. That means for every $10,000 invested in the fund, your annual expenses will be only $6, so you get to keep more of the returns of the underlying investments.

The fund tracks the CRSP U.S. Large Cap Growth Index, which consists of 300 of the largest growth stocks in the U.S. stock market. Because of this, it should come as no surprise that the fund's top holdings look quite similar to those of the Russell 1000 Growth ETF.

So who should invest in the Vanguard Growth ETF? Simply put, it's a good choice for investors who want low fees and diverse exposure to large growth stocks without leaving too much of their portfolio tied to a single company's fortunes. 

3. Vanguard Dividend Appreciation ETF

Generally speaking, growth stocks don't pay high dividends. In a nutshell, fast-growing companies typically feel that the best use of their profits is to invest them back into the business. It's rare to find a growth stock with a dividend yield above 3% or so. However, there are some solid dividend-paying growth stocks, and the Vanguard Dividend Appreciation ETF focuses on these companies.

The ETF tracks the NASDAQ US Dividend Achievers Select Index, which consists of 182 stocks with strong track records of raising their dividends. To be fair, the fund is technically classified as a "large blend" fund, which means its holdings aren't purely "growth stocks." However, the top holdings are packed with companies with lots of growth potential, such as Medtronic and Texas Instruments, just to name a couple. Medtronic is expected to grow revenue at a 9% annualized rate over the next three years, and Texas Instruments' revenue has roughly doubled in the past five years,with similar growth expected going forward. 

With a 1.87% dividend yield, the ETF isn't exactly "high income," but it can certainly be a good compromise for investors who want exposure to exciting growth stocks but also rely on their portfolio for income. Plus, the dividends paid by the fund tend to rise over time. In fact, it currently pays a 41% higher dividend than it did 10 years ago.

4. iShares Russell 2000 Growth ETF

The Russell 3000 is an index of small, medium, and large U.S. stocks. The Russell 2000 is made up of the smallest 2,000 components of the Russell 3000, and it's widely considered to be the best small-cap benchmark of the U.S. stock market because of its breadth (2,000 stocks provides a big overview of the small-cap market). The iShares Russell 2000 Growth ETF invests in the Russell 2000's growth stocks -- 1,186 of them, to be exact.

Generally speaking, small-cap stocks tend to be more volatile than their larger counterparts, but also tend to have more potential for growth. Think about it -- it's typically (but not always) easier for a $1 billion company to double in size than it is for a $100 billion company.

Not only do small-cap stocks tend to be more volatile and have higher long-term return potential than mid-caps or large-caps, but they also tend to be much closer in market cap to one another. In other words, you don't have companies like Apple or Amazon towering over the rest of the index components.

This makes the fund much less top-heavy, meaning that your investment's performance won't be too dependent on a small group of relatively large holdings. In fact, there's only one component that accounts for more than 1% of the fund's assets, and the 10 largest components combine for less than 7%. Top holdings of the fund include Nektar Therapeutics, GrubHub, and Paycom Software, just to name a few examples. These aren't necessarily household names -- and that's kind of the point. These are smaller, fast-growing companies with lots of potential.

The iShares Russell 2000 Growth ETF is appropriate for investors who don't mind a little extra volatility but also don't want too much of their portfolio's performance dependent on a handful of enormous companies.

5. Vanguard Mid-Cap Growth ETF

If the top-heavy nature of a large-cap growth fund isn't appealing to you, yet small-cap growth stocks seem just a bit too volatile for your taste, then a mid-cap growth stock fund could be a good compromise.

If you aren't familiar, mid-cap stocks are generally defined as those with market capitalizations between $2 billion and $10 billion, although this exact definition can vary depending on whom you ask.

The Vanguard Mid-Cap Growth ETF tracks the CRSP U.S. Mid-Cap Growth Index, and it has 164 of them in its portfolio as of this writing. I just mentioned that different sources have different definitions of what makes a "mid-cap" stock, and the Vanguard fund's underlying index is no exception: The median market cap of the fund's holdings is $15 billion.

The general idea of investing in mid-cap growth stocks is that they'll have higher long-term growth potential than large-cap growth stocks, but won't be quite as volatile and risky as small caps. To give you an idea of the types of companies we're talking about, the fund's five largest holdings as of March 31, 2018 are Fiserv, Edwards Lifesciences, Roper Technologies, ServiceNow, and Autodesk. Just to give you an idea about the type of companies these are, consider that Autodesk is a manufacturer of design software (you may have heard of CAD) and is expected to grow its revenue at an impressive 30% rate over the next three years.

6. Vanguard Mega Cap Growth ETF

As the name implies, the Vanguard Mega Cap Growth ETF focuses on the largest of the large U.S. growth stocks, tracking the CRSP U.S. Mega Cap Growth Index. The fund only owns 131 stocks as of March 31, 2018, which is less than half of the previously discussed Vanguard Growth ETF.

The fund's top holdings are roughly the same as the other large-cap growth funds mentioned here. Specifically, the 10 largest stock positions owned by the fund include (in order) Apple, Alphabet, Amazon.com, Facebook, Visa, The Home Depot, Boeing, Mastercard, Comcast, and Phillip Morris International.

The key difference between the Mega Cap ETF and the others is its high concentration -- that is, its relatively low diversification, especially among the largest stocks. The 10 stocks I just mentioned make up a whopping 38.7% of the Vanguard Mega Cap Growth ETF's assets. By comparison, the Vanguard Growth ETF's top 10 holdings make up 31.8% of its total assets, while this drops to just 14.4% for the Vanguard mid-cap fund and less than 7% for the iShares Russell 2000 Growth ETF.

If you invest in the Vanguard Mega Cap Growth ETF, your performance will be highly dependent on a small basket of large holdings. In other words, if you're especially confident in stocks like Apple, Alphabet, and the others on the list, then this could be a good fit for you. On the other hand, if you aren't comfortable being so reliant on your fund's largest positions, you may be better off looking elsewhere.

7. iShares MSCI EAFE Growth ETF

So far, all of the ETFs discussed here have focused on U.S. stocks. However, it can often be a good idea to add geographical diversification to your portfolio by investing in an international stock fund. International stock exposure can help protect you from U.S.-specific issues, as well as exchange-rate fluctuations. For growth investors, the iShares MSCI EAFE Growth ETF may be a good option. (Note: EAFE is short for "Europe, Australia, Asia, and the Far East.")

This ETF invests in an index of non-U.S. stocks from the regions listed above, consisting of 541 different companies as of this writing. And the fund isn't too top-heavy: The top holding accounts for less than 2.1% of the fund's assets, and although the fund is full of foreign companies, many of the key investments are well-known to most American investors, such as Novo Nordisk and Roche.

Geographically, Japan is the most represented foreign market with 24% of the fund's assets, and there are also high concentrations of companies based in the U.K., France, Germany, Switzerland, Australia, and the Netherlands. No other nation makes up more than 4% of the fund's stocks.

Which is best for you?

There's no one-size-fits-all growth ETF for everyone. That's why I chose to discuss seven different options in this article.

The best choice (or choices) for you depends on your risk tolerance, time horizon, investing goals, and diversification needs. For example, if you already own stocks like Amazon and Facebook in your stock portfolio, then a small-cap growth ETF can give you exposure to smaller companies as well. If you want more growth stock exposure and more international exposure in your portfolio, then an international growth stock ETF could be a good fit.

The bottom line is that when deciding which of these growth stock ETFs to buy, you should look beyond their performance track records, fees, and even their largest stock holdings. You need to decide which is most appropriate for you.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Matthew Frankel owns shares of Apple.

The Motley Fool owns shares of and recommends Alphabet (A and C shares), Amazon, Apple, Facebook, Mastercard, Netflix, Paycom Software, Tesla, and Visa. The Motley Fool owns shares of Medtronic and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short May 2018 $175 calls on Home Depot, and long January 2020 $110 calls on Home Depot. The Motley Fool recommends 3M, Comcast, Diageo, Grubhub, Home Depot, Nestle, and Roper Technologies. The Motley Fool has a disclosure policy.