Investing in exchange-traded funds (ETF) is an excellent way to gain exposure to powerful trends in the market while availing yourself of instant diversification. They've become popular since they're easily buyable and sellable on an open market and typically come with low expense ratios.
There are all kinds of ETFs today, meeting every kind of investor need. If you're looking to access the power of growth investing in a safe and easy form, I highly recommend the Vanguard S&P 500 Growth ETF (VOOG +0.64%) and the Vanguard Information Technology ETF (VGT +1.27%). If you have $1,000 to invest today, these ETFs provide years of growth opportunities while minimizing risk.
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The Vanguard S&P 500 Growth ETF
The Vanguard S&P 500 Growth ETF is the largest ETF in the world, with $1.5 trillion in assets, much more than most single stocks trading on the market. Index funds are ideal investments because they provide an easy way to benefit from the overall long-time success of the S&P 500 index.
However, S&P 500 Growth ETF is slightly different in that in includes just over 200 stocks -- the cream of the crop from the broader index. It tracks the S&P 500 Growth index, an index of the growth stocks in the S&P 500, and this ETF has outperformed the broader S&P 500 over time.
VOO Total Return Level data by YCharts
Its largest components are Nvidia, Alphabet, Apple, and Microsoft, which collectively make up 38% of the fund's weighting. No other stock has greater than a 6% weighting, so despite begin somewhat top-heavy, the VOOG ETF provides reasonable diversification and access to multiple sectors to help mitigate risk.
Since it simply tracks an index, stocks that are no longer growth stocks in the index will be automatically switched out for higher performers, ensuring that the ETF has continued potential to grow and beat the market. It has an extremely low expense ratio of 0.07%, or $7 annually for each $10,000 invested.
The Information Technology ETF
The Information Technology ETF is focused on tech stocks, and today, that means artificial intelligence (AI). It has more components than the VOOG ETF, at 322, but it's arguably less diversified, since it's focused specifically tech stocks. Nvidia, Apple, and Microsoft are the three largest components, together accounting for nearly 45% of the total. Its other components have a much smaller role in the portfolio, but the ETF allows you to own many up-and-coming tech stocks without concentrating too much in what could be riskier stocks. Some of its smaller positions include well-known AI stocks like Palantir Technologies and Advanced Micro Devices, but it also gives you lesser-known stocks like Extreme Networks and SolarEdge Technologies. Here, too, components are passively changed based on preset criteria, keeping the fund in growth mode.
Since many of its stocks are aggressive growth stocks, this ETF has outperformed over time, delivering the highest gains of any Vanguard ETF over the past 10 years. Annualized, it has returned more than 22%, while the benchmark index has returned 14.8%.
VOO Annualized 10 Year Total Returns (Daily) data by YCharts
This year, it's up 23.8% while the S&P 500 is up 19%.
This ETF has a low expense ratio of 0.09%, which is another great feature for this high-performing ETF.
