Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some big growth stocks to your portfolio but don't have the time or expertise to hand-pick a few, the SPDR S&P 500 Growth ETF (NYSEMKT:SPYG) could save you a lot of trouble. Instead of trying to figure out which big growth stocks will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual-fund cousins. This ETF, focused on big growth stocks, sports a very low expense ratio -- an annual fee -- of 0.2%. It yields about 1.5%.
This big growth stocks ETF has outperformed the S&P 500 over the past three, five, and 10 years, though not always by much. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Why big growth stocks?
Big companies can add some ballast to your portfolio. They can't always grow as briskly as their smaller counterparts, but many of them are still posting hefty growth rates. Better still, in order to reach their current size, they likely have some strong assets and features. This ETF focuses on big stocks with growth characteristics.
More than a handful of big growth stocks had strong performances over the past year. Biotech powerhouse Gilead Sciences (NASDAQ:GILD), for example, doubled in value. Gilead's all-oral hepatitis-C treatment, Sovaldi (sofosbuvir), has just received FDA approval and investors are looking for it to outsell some competing formulas despite its hefty price tag of $1,000 per day, or about $84,000 for a full 12-week treatment. Gilead Sciences is well known for its success with HIV drugs and has also recently reported promising clinical trial results for drugs treating lymphomas and blood disorders. Piper Jaffray named Gilead Sciences one of its top stocks for 2014 and Bank of America Merrill Lynch recently reiterated its buy rating for Gilead.
Visa (NYSE:V) surged 43% and is poised to profit as more and more people and businesses shift from cash transactions to electronic ones. Its presence in emerging markets is also a plus, as such economies are growing rapidly -- and for Visa, that means more people beginning to use plastic for purchases. Visa was added to the Dow Jones Industrial Index this year, which is significant, as there are only 30 companies in it. Some would like to see Visa tap the enormous market of underbanked young people, while doubters worry that its stock is a bit overpriced right now.
Other big growth stocks didn't do quite as well over the last year, but could see their fortunes change in the coming years. Qualcomm (NASDAQ:QCOM) gained 16%, but that still lagged the S&P 500 considerably. Qualcomm supplies iDevices and Android devices with chips and makes a lot of money licensing its technology. The company's fourth-quarter report was mixed, with revenue up 33% but management tempering expectations. Qualcomm has been hiking its dividend aggressively for a decade now, and its yield is at 1.9%. Qualcomm's growth in China may be hampered by a Chinese probe into possible antimonopoly practices, but the company's expansion into health care and networking is quite promising. It has a new Gimbal beacon technology that rival's Apple's iBeacon, though the future of either of them is uncertain, and it has introduced a low-end 64-bit chip for smartphones, too.
Philip Morris International (NYSE:PM) advanced 4%, challenged by shrinking volume recently, even for its vaunted Marlboro brand. It yields 4.3% and its dividend looks rather secure. With domestic tobacco companies challenged by tightening regulations, rising taxes and a shrinking smoking base, many have assumed that Philip Morris is the best bet in tobacco. The company also raised the specter of lower volume and likely lower returns for investors. Philip Morris does have its fans, though, who like its innovation, its share buybacks, and its embrace of electronic cigarettes (though even e-cigs are threatened by regulations).
The big picture
If you're interested in adding some big growth stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.