April has been a difficult month for the stock market as investors worry about the impact of President Donald Trump's tariffs on corporate earnings and the general economy. Trump announced a sweeping tariff plan, including countries worldwide, earlier this month, then more recently launched a 90-day pause to allow for negotiations. However, tariffs on goods from China -- at a level of 145% -- continue. The concern is these duties will increase costs for U.S. companies and prices for U.S. consumers, and that this will weigh on growth.
Stocks across industries have suffered, but those in growth sectors have been hit particularly hard. Growth companies rely on strong economic times -- when interest rates are low and consumers are spending -- to supercharge their businesses. So, any sign of economic weakness generally weighs on demand for growth stocks.
And this is exactly what's happening at the moment. The good news for you as a long-term investor is that this allows you to get in on these players for interesting prices. And if you're not sure of which growth players to choose, I've got a great solution for you. Pick up an asset that allows you to invest in many top stocks with just one purchase. I'm talking about an exchange-traded fund (ETF).
Image source: Getty Images.
ETF investing
First, a quick note about ETFs. They offer access to many stocks according to a particular theme, such as growth, dividend stocks, technology, and more. These funds can track an index, either a well-known benchmark like the S&P 500 or a smaller index covering a theme.
And you'll be happy to know that investing in an ETF involves the same steps as investing in a stock as these instruments trade daily on the market, just like a stock. The one thing to be aware of is ETFs come with fees, expressed as an expense ratio. Choose an ETF with an expense ratio of less than 1% in order to maximize your long-term gains.
Now, let's consider the Vanguard S&P 500 Growth ETF (VOOG +1.10%), a no-brainer fund to buy now that was trading for $310 per share at the close of Monday's trading. I say it's a "no-brainer" because this ETF offers access to a solid group of established growth players that, in spite of today's headwinds, still have fantastic long-term prospects. I'm talking about stocks such as Nvidia, Apple, Microsoft, and Amazon, which are among the top holdings in this growth fund. These companies have proven themselves over time, and in recent quarters moved into newer growth areas -- such as artificial intelligence (AI) and even quantum computing -- to spark a new phase of growth.
Technology and 10 other industries
Though tech stocks are the most heavily weighted in this Vanguard ETF -- at about 37% -- the fund also includes players in 10 other industries, so through this fund you gain access to a wide variety of growth companies. For example, other holdings include pharma giant Eli Lilly, payment card powerhouse Visa, and retailer Costco Wholesale.
This Vanguard fund mimics the S&P 500 Growth Index, and what's great about this is as the index adds or eliminates certain members, the fund follows. So you're always ensured exposure to the top growth players.
As I mentioned earlier, these days, many investors have been turning their backs on growth stocks on concern the companies will suffer from tariff policies. The Vanguard S&P 500 Growth ETF has slipped 15% since the start of the year against this backdrop.
View this as an opportunity
The price drop offers long-term investors a chance to get in on many promising players for a great price. Though growth stocks may face headwinds in the near term, they still offer investors the key to explosive growth during better economic times.
It's important to keep in mind that throughout history, the market has experienced many recessions, crashes, and other down times, and stocks overall always have gone on to recover and thrive. That's why it's an excellent idea to get in on quality stocks and ETFs during uncertain times and hold on for the long term as they deliver growth. And right now, the Vanguard S&P 500 Growth ETF makes the perfect buy for investors looking for a deal on an investment that could soar over the long run.
