If you want to invest in a bunch of growth stocks, but you don't yet have enough money to buy many of them, what do you do? Well, consider parking some or many of your long-term dollars in the Vanguard Growth ETF (VUG +0.33%).
As you may know, an exchange-traded fund (ETF) is a fund that trades like a stock, so you can easily invest in it via any good brokerage. Permit me to explain why the Vanguard Growth ETF is a particularly attractive ETF.
The Vanguard Growth ETF tracks the CRSP U.S. Large Cap Growth index, which measures the performance of large-capitalization growth stocks. Vanguard is known for low fees, among other things, and this ETF is no exception, sporting a tiny expense ratio (annual fee) of just 0.03%. Here's how tiny that is: For every $10,000 you have invested in the ETF, you'll pay only $3 per year in fees.
The table below shows how the ETF has performed lately. I'm including the performance of the Vanguard S&P 500 ETF, as well, for comparison.
Fund
5-Year Avg. Annual Return
10-Year Avg. Annual Return
15-Year Avg. Annual Return
Vanguard Growth ETF
15.42%
18.26%
16.38%
Vanguard S&P 500 ETF
14.10%
15.56%
14.50%
Considering that the S&P 500 has averaged annual returns close to 10% (ignoring inflation) over many decades, all those returns are well above average, reflecting the fact that we've been living through some heady years lately, stock market-wise. Still, the growth ETF clearly outperformed the S&P 500.
Here are the Vanguard Growth ETF's recent top holdings. Interestingly, those are the same top 10 holdings as are in the Vanguard S&P 500 index fund -- only with greater weightings. They also include all seven of the "Magnificent Seven" stocks. So if you like these massive (mostly) tech stocks, the growth ETF gives you more of them.
Stock
Percent of ETF
Nvidia
13.3%
Apple
11.53%
Microsoft
8.76%
Alphabet Class A
6.49%
Broadcom
5.20%
Amazon.com
5.11%
Alphabet Class C
5.11%
Meta Platforms
3.88%
Tesla
3.12%
Eli Lilly
2.31%
This ETF has performed very well in recent years and is likely to continue doing well over the decade or more ahead. It might be a good fit for you if:
Go ahead and consider this ETF for your portfolio. If you prefer less volatile investments, or want to balance this one with a more value-oriented fund, check out the Vanguard Value ETF (VTV +0.26%).