Growth stocks have been leading the market higher for more than a decade, and that leadership could continue as artificial intelligence (AI) looks to reshape the world we live in. AI appears to still be in its early innings, so even with the market hovering near all-time highs, now can still be a great time to start investing for the long term.
Even starting with a small amount, such as $100, can go a long way if you use a consistent dollar-cost averaging strategy over a long period of time. For example, if you invest just $100 a month over a 30-year period and get a 15% annual average return, you would have more than $563,000 at the end of that period. That's not too shabby.
Let's look at three growth-focused exchange-traded funds (ETFs) that could be great places to start investing in today.
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1. Invesco QQQ Trust
The Invesco QQQ Trust (QQQ 0.73%) gives investors exposure to the Nasdaq-100 index, which is home to the largest nonfinancial companies on the Nasdaq exchange. It's packed with innovation-driven leaders like Nvidia, Microsoft, Broadcom, and Alphabet. More than 60% of the fund's holdings are in technology, which has powered its outperformance for years.
Over the past decade, the Invesco QQQ Trust has delivered an average annual return of about 20.3%, easily topping the S&P 500's 15.3% gains over the same period. On a cumulative basis, that's a 536.4% return compared to 315.3% for the S&P 500. It's also beaten it consistently, outperforming the benchmark index on a rolling-12-month basis nearly 90% of the time during that stretch.
The Nasdaq-100 is loaded with companies leading the charge in AI, and the Invesco QQQ Trust gives you great exposure to these stocks.
2. Vanguard Growth ETF
Another great growth ETF option is the Vanguard Growth ETF (VUG 0.56%). It tracks the CRSP U.S. Large Cap Growth Index, which represents the growth side of the S&P 500. The fund owns about 165 companies, but its top seven holdings -- Nvidia, Microsoft, Apple, Alphabet, Amazon, Broadcom, and Meta Platforms -- make up more than half of its portfolio.
That concentration has been a huge tailwind. Over the past decade, the ETF has produced average annual returns of roughly 17%, outperforming the S&P 500. In the past three years, meanwhile, it has generated gains of around 31.7% a year. It also benefits from Vanguard's hallmark low-cost structure, with an expense ratio of just 0.04%.
The Vanguard Growth ETF's focus on large, profitable tech-driven businesses makes it a strong long-term core holding. If megacap growth stocks continue to lead the market higher, especially as AI adoption spreads, this ETF should continue to produce market-beating returns.
3. Global X Artificial Intelligence & Technology ETF
If you want a more focused way to play the AI boom, the Global X Artificial Intelligence & Technology ETF (AIQ 0.05%) is worth a look. Unlike broader growth funds, the ETF specifically targets companies driving or benefiting from AI. It holds nearly 90 stocks across different tech segments.
What the ETF also gives investors, which the two ETFs above do not, is exposure to international AI companies, such as Alibaba and Taiwan Semiconductor Manufacturing. About 70% of its portfolio is U.S.-based, but this international exposure helps add some useful geographic diversity.
Since its 2018 launch, it has averaged annual returns of nearly 18%, but its recent performance has been much stronger, delivering gains of nearly 37.4% a year over the past three years. Its expense ratio is a bit on the high side at 0.68%, but you're paying for a more targeted and globally diversified AI portfolio.
The Artificial Intelligence & Technology ETF offers one of the most direct ways to invest in the AI technology that is set to shape the next decade. If you're looking to be aggressive and don't want to make a bet on individual stocks, this is a great option to have in your portfolio.
