3 Growth-Focused ETFs That Look Very Attractive Right Now

It’s probably safe to say that most investors aren’t buying exchange traded funds (ETFs) for the growth potential they can provide. Rather, I’d wager that most ETF investors are after the ultra-low-cost diversification such funds provide. Instead of creating one’s own diversified portfolio (and rebalancing on a somewhat frequent basis), outsourcing that activity to experts for a few basis points of cost seems like a good tradeoff to me.

Given the surge in ETF demand we’ve seen play out in recent decades, it’s clear that millions of investors tend to agree with this view. 

However, that’s not to say that investors looking to amplify their returns (and beat the market during bull markets) can’t benefit from owning specific ETFs that are constructed with very growth-heavy holdings. 

Here are three such ETFs younger investors looking to grow their wealth for retirement may want to consider right now. 

iShares Russell 1000 Growth ETF (IWF)

One ETF I haven’t touched on much in the past is the iShares Russell 1000 Growth ETF (IWF). That’s not because I don’t think the Russell 1000 index isn’t worth following. It’s just that most of the time, I find myself covering the largest and most stable companies (and I do tend to tilt my portfolio in this direction, for obvious reasons).

The thing is, the Russell Index comes in many flavors, and the Russell 1000 is much more concentrated with larger (but still small-cap) companies in this realm. In other words, this fund tracks more of the large to mid-sized growth stocks in the market, and still holds a significant weighting for Mag 7 names. So, investors aren’t really giving up large-cap exposure with owning such an ETF.

For those seeking capital appreciation over dividend income, this ETF’s long-term performance is notable. Over the past decade alone, IWF has produced an annualized return of 14.9% with its five-year return closer to 20%. That’s remarkable outperformance relative to most ETFs, and speaks to the cost-effective exposure this fund provides to some of the fastest-growing companies in compelling sectors. 

iShares Morningstar Large-Cap Growth ETF (ILCG)

Another ETF I’ve recently come across which I think can provide excellent exposure to growth stocks for certain investors is the iShares Morningstar Large-Cap Growth ETF (ILCG). This ETF is focuses more on the large-cap grouping of growth stocks, so it won’t provide the sort of high-growth (and more speculative) exposure the IWF ETF provides. 

Personally, this ETF is one I’d probably consider over IWF given my own personal risk profile and investing preferences. But I included both on this list (with a great third pick to round it out) to try to appeal to investors of all demeanors. 

This ETF comes with an expense ratio of 0.04%, so it’s the cheapest on this list in terms of its overall cost. But even with this ultra-low cost structure, ILCG still provides a portfolio of companies with disciplined growth strategies and strategic advantages that’s hard to create on one’s own. In removing much of the single-stock risk that typically comes with growth investing, this is a fund that I think is well-suited for those looking to capitalize from the innovation in a number of key emerging sectors. 

Vanguard Small-Cap Growth ETF (VBK)

Finally, we round out this list of growth ETFs to consider buying with the Vanguard Small-Cap Growth ETF (VBK). As its name suggests, this fund focuses on the smallest but fastest-growing companies in the U.S. And as many investors would likely guess, this fund is also disproportionately exposed to companies operating in the tech sector.

That said, one of the things I like about VBK is that there’s a relatively wide swath of companies included in this fund, spanning various high-growth areas of the tech sector (and a variety of other sectors as well). And given its penchant for mainly small0cap stocks, there’s going to be a much higher beta (which is great for investors who are very bullish on the ability of the U.S. tech sector to continue to dominate long-term).

If M&A activity begins to pick up in the market, this is an ETF I think can provide unique upside. I’ll be waiting to see an uptick on this front before jumping in, but as the saying goes, “buy low and sell high.” Maybe right now is the best time to add exposure to this particular ETF – we’ll see. 

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