A recent survey from the Employee Benefit Research Institute (EBRI) found that Americans are less confident that they'll have enough saved for retirement than they were a year ago. EBRI's 2023 Retirement Confidence Survey showed that 64% of those polled were confident about their retirement savings, down from 73% a year ago.
This makes sense when you consider the market lost about one-fifth of its value last year, as measured by the S&P 500, or one-third if you use the Nasdaq Composite as a gauge.
If your retirement portfolio lost some value last year and you are looking for some investments to supercharge your savings, consider these two aggressive growth exchange-traded funds (ETFs).
1. SPDR S&P Semiconductor ETF
The semiconductor industry has not only been one of the top performers over the long term, but it is leading the market right now during this period of market uncertainty. And more importantly, semiconductors, the chips that power computers, are going to become increasingly important in the digital age. In fact, the global semiconductor industry is expected to double by 2029 to $1.4 trillion, according to Fortune Business Insights.
NYSEMKT: XSD
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Rather than try to pick the individual winners, you could invest in the SPDR S&P Semiconductor ETF (XSD +0.55%), which is the best performer in its class, and is more broadly diversified than most. It tracks the S&P Semiconductor Select Index, which draws from the S&P Total Market Index, so it includes semiconductor stocks of all market cap sizes.
It holds about 40 stocks, and they are modified equal-weighted, so each position is roughly the same, ranging from about 3.75% to 3.54% for the largest positions -- Nvidia, Micron Technology, and Intel -- to around 1% for the smallest holding. But most are around the 3% range.
The returns have been stellar as the ETF is up 6.7% year to date as of May 1. While the ETF had a difficult 2022, it has returned 4.2% over the past 12 months, and over the past five and 10 years, it has an average annualized return of 22.2% and 22.5%, respectively. These returns outperform the Nasdaq Composite by a significant margin.
Because it is so concentrated in one industry, you probably don't want much more than 5% of your portfolio in an aggressive growth ETF, depending on your risk tolerance.
2. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT 0.86%) is another high-octane, aggressive growth ETF that can provide excellent long-term returns. This ETF invests in the technology sector, tracking the MSCI US IMI 25/50 Information Technology Index. This is one of the broadest and most diversified technology sector ETFs, with about 366 stocks across the broad spectrum of technology stocks, including large caps, mid caps, and small caps. The ETF is cap-weighted, but there are various screens to give it additional diversification.
The three largest holdings are Microsoft, Apple, and Nvidia. The top sectors are technology hardware, software systems, semiconductors, and fintech.
NYSEMKT: VGT
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The performance has been nearly as good as the SPDR S&P Semiconductor ETF over the long term. The ETF is up 20.5% year to date, while it has a one-year gain of 5.6%, as of May 1. Also, it has a five-year annualized return of 18.8% and a 10-year average annual return of 19.4%, as of May 1.
Like the SPDR ETF, an aggressive growth ETF like this should be a minor player in your portfolio, but if you set aside, say, 10% of your portfolio for these two high-performing ETFs, you'd give a well-diversified retirement portfolio a nice boost of alpha.
