1 no-brainer growth ETF you can buy right now for under $1,000

Investing through exchange-traded funds (ETFs) offers investors a tremendous amount of choice. Just like stocks, some ETFs are more volatile and some less volatile, some are more focused on growth, and some are more focused on value. The list goes on.

But what’s similar about all of them is that they offer pre-made variety. Even if you only have a small amount of assets and invest in ETFs focused on specific trends, you’re dividing your eggs into multiple baskets. For example, let’s look at Cathie Wood’s ETF. her flagship Ark Innovation ETF It only owns 36 stocks. Or you can invest in Vanguard’s. Russell 3000 ETFinvests in, as you might have guessed, the 3,000 stocks in the index. The advantage of the former is concentrated investment in disruptive technologies, while the advantage of the latter is low-risk diversification.

If you’re looking for a high-growth option that minimizes risk while focusing on growth stocks. Vanguard Growth ETF (VUG 0.19%) It’s a no-brainer choice.

Why this ETF?

Beating the market isn’t easy. ETFs that track trends S&P 500A commonly used “market” measure, has typically provided annualized returns of around 10% over the long term. That doesn’t mean the S&P 500 goes up 10% every year. It gets better and worse, you go through great and terrible times.

However, if you invest and then “set it and forget it,” you will average about a 10% return over the long term. This is an excellent rate for growing your money, especially when you consider annual compounding. Most investors would do well to invest a portion of their portfolio in these types of index funds. This index fund features approximately 500 of the top publicly traded U.S. companies.

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But it is possible to beat the market. The Vanguard Growth ETF invests in approximately 200 of the largest U.S. companies, with the idea of ​​constructing a higher-level index. CRSP US Large Cap Growth Index. This will help you earn the most profit and gain exposure to the biggest growth companies.

And it still varies. Although it focuses on growth stocks, it holds enough stocks to keep the collection broad. ellie lily To payment service providers Visa.

The ETF’s top five holdings are: microsoft, apologize, nvidia, Amazonand meta platform. Because it is a weighted index, these stocks account for approximately 50% of the ETF’s total value. However, the remaining 50% is spread across many other stocks. And because this ETF is a passively managed ETF, it means it tracks the index, automatically selling underperforming stocks when the index rises and keeping the ETF in growth mode.

Lastly, this fund has an extremely low expense ratio of 0.04%, making holding costs low.

Outperforming the Market

Most actively managed funds are unable to beat the market in any given year. Last year, 60% underperformed the market. However, the Vanguard Growth fund has significantly outperformed the market on average over its entire period, generating better returns of 11.86% per year over the past 20 years compared to 10.34% for the overall market.

These small percentage points mean a significant difference in how much money you would have made if you invested $1,000 in a standard S&P 500 ETF two years ago.

VUG Total Return Level Data from YCharts

For most investors, it still makes sense to invest in broader market index funds. This provides a level of security that no one can beat. However, if you are looking for additional investments, the Vanguard Growth ETF is a fantastic, no-brainer ETF that you can buy and hold forever.