10 Best Growth ETFs Of May 2024

For those striving to match the large-capitalization growth index returns, look no further. The Schwab U.S. Large-Cap Growth ETF delivers—for an extremely low 0.04% annual expense ratio. This passively managed ETF presents tax-efficient performance from the largest and fastest-growing companies in the investment universe. The 250+ holdings are not cheap, and investors will pay an average cost of $32.00 for one dollar of earnings when investing in SCHG.

The market favored large-capitalization growth firms during the past decade with a stellar 15.05%  annualized average return. SCHG’s 10-year performance has surpassed both the category and index returns.

Before investing, however, realize that SCHG is a concentrated fund with 55% of the fund populated by the top 10 holdings. Apple and Microsoft make up a quarter of the fund. As long as large-cap growth continues to shine, investors in SCHG should be rewarded.

Environmental, social and governance investing, also known as ESG investing, continues to be popular, as evidenced by the creation in 2020 of this SPDR S&P 500 ESG fund.

This S&P 500 index fund selects from a pool of the top 500 companies in the U.S. that meet sustainability criteria related to ESG metrics. The SPDR 500 ESG ETF includes companies in accord with the United Nations Global Compact principles and eschews industries such as weaponry and military contracting, tobacco, thermal coal and oil sands.

The fund’s three-year returns surpass the index and those of the Large Cap Blend category. Roughly 32% of the 316 companies are from the technology sector. Investors will recognize EFIV’s largest holdings: Apple, Microsoft, Amazon, Nvidia and Alphabet, which make up 30% of EFIV. This large-cap ESG fund has benefited from the large-cap growth dominance of recent years.

Launched on June 16, 2020, the iShares ESG Advanced MSCI EAFE ETF delivers faster growth, and higher quality than its foreign large-cap blend peers.

Although branded as an ESG fund, DMXF, delivers sound international growth that competes favorably with non-ESG international ETFs. The fund includes large and mid-cap firms from Europe, Australia and Asia with positive environmental, social and governance ratings. DMXF screens out firms involved in adult entertainment, alcohol, weaponry, for-profit prisons, fossil fuels, nuclear power, tobacco, predatory lending and more.

In its short tenure, DMXF has outperformed the index and foreign large-cap blend category peers. The financial services, industrials, technology and healthcare sectors compose roughly 70% of the fund. While international ETFs have underperformed their U.S. counterparts for a while, this has not always been the case. With 40% of the world’s investment market, don’t overlook international equities.

The Nasdaq 100 index represents the largest 100 non-financial companies listed on the Nasdaq stock market exchange, based on market capitalization. The Direxion Nasdaq-100 Equal Weighted ETF allocates the top 100 Nasdaq stocks equally, leading to less exposure to the biggest names, and additional weight on some of the smaller names. This equal weight strategy is designed to deliver growth, with slightly less volatility than its market capitalization weighted peers.

The top 10 holdings of QQQE make up a relatively modest 10% of the fund, leading to a widely diversified and well-balanced fund. Of course, in rising markets, you’ll sacrifice some growth, with an equal-weight fund. The 10-year QQQE performance is better than the large-cap growth category average, while slightly trailing the index.

The passively managed American Century U.S. Quality Growth ETF tracks large- and mid-capitalization U.S. companies exhibiting high quality, strong growth and fair valuations. This factor-based ETF follows an investment strategy similar to its American Century U.S. Quality Growth Index benchmark. QGRO devotes greater assets to fast-growing and more fairly based companies.

QGRO has roughly 200 holdings, with 25% in the top 10 holdings. This makes the fund less susceptible to the extreme price movements of a few firms. Unlike the market-cap large-cap growth funds, the top 10 holdings of QGRO are populated with several lesser-known companies, such as Booking Holdings, ServiceNow, Autodesk and Neurocrine Biosciences, in addition to the well-known Alphabet and Microsoft.

Over the past 10 or more years, small-capitalization stocks have been less popular than their larger-cap brethren. But that doesn’t mean that the previous trend will continue. In fact, we’re seeing signs of a shift favoring small caps right now.

Smaller companies have room to grow, and can add diversification to a large-cap heavy portfolio. The Invesco S&P SmallCap Momentum ETF is patterned after the S&P Smallcap 600 Momentum Index which includes 120 securities with the highest “momentum scores.” Momentum refers to stocks whose prices are trending upwards. XSMO owns fast-growing quality stocks with strong balance sheets.

The XSMO 10-year performance has surpassed that of the index and small-cap growth category by nearly two percent annualized. Currently, this fund is downright cheap, and investors will pay roughly $12 per every dollar of earnings, in contrast with the higher valuation firms of the category and index.

The Fidelity Enhanced Large Cap Growth ETF is one of the few actively managed ETFs that sports low fees and strong performance. The fund’s mission is capital appreciation from stocks within the Russell 1000 Growth Index. The fund screens for valuation, growth, profitability and other factors. FELG uses the popular factor-based approach and strives to outperform the Russell 1000 Growth Index.

The fund has high conviction in its top 10 holdings, which make up 53% of FELG. Although branded a large-cap growth ETF, 11% of the companies are from the mid-cap sphere and nearly three percent from the small-cap domain. Forty-five percent of the fund’s companies are from the technology sector with another 26% split between the consumer cyclical and communications services.

FELG’s annualized 10-year return of over 14% surpassed the large-cap growth category and the index returns. Although not cheap, the fund’s price/earnings ratio is lower than that of the category average and the index.

The Vanguard U.S. Momentum Factor ETF demonstrates the success of the low-fee, factor-driven, actively managed investment approach.

VFMO invests in large-, mid- and small-cap stocks with strong recent performance. The fund’s benchmark is the Russell 3000 Stock Market Index, which spans the majority of public companies in the U.S. The 564 companies owned by VFMO include a large proportion of mid- and small-cap holdings.

The companies in VFMO are among those exhibiting the fastest recent growth, which incurs additional price volatility as well. The lower than category and index average price-to-earnings ratio suggests that the holdings are more reasonably priced than their peers. If you’re seeking a low-priced growth ETF that owns the fastest growing small- and mid-cap companies, consider VFMO.

Small -cap growth investing is dominating, as the category delivered 26.19% during the previous year. Although the future is unknown, this simple statistic highlights the benefits of a diversified portfolio, as investment styles go in and out of favor. With a negligible expense ratio, The Vanguard Small-Cap Growth ETF is passively managed and attempts to replicate the performance of the S&P SmallCap 600 Growth Index.

The fund is well-diversified with 638 stocks, and the top 10 holdings make up only eight percent of the VBK. None of the stocks make up more than 1% of the fund. Similar to large-cap growth funds, roughly 27% of VBK companies land in the tech sector, with industrials, healthcare and consumer cyclical firms making up the next 48%.

The market cap weighting means that the best performers maintain greater portfolio weightings, while the low fee and broad diversification provide this small-cap growth fund with the likelihood of long-term category matching returns.

Representing roughly 93% of the total market capitalization of the U.S. equity market, the Russell 1000 includes the largest 1,000 public companies in the U.S. If you want broader growth ETF exposure beyond the S&P 500 universe, Vanguard Russell 1000 Growth ETF  doubles it.

Another low fee passively managed ETF, VONG delivers exposure to 444 high-quality, large U.S. companies, concentrated in the technology sector.  VONG is less diversified due to its market capitalization weighting with 52% of the holdings in the top 10 names.

Index fund proponents will benefit from 10 years of category beating returns. A low 14% turnover ratio keeps the high-quality leaders such as Apple, Microsoft, Amazon, Nvidia and Alphabet in the fund’s top spots. VONG hits the growth ETF mark with low fees, and broad coverage of the U.S. equity growth sector. Just beware, that should these large-cap growth stocks falter, so will the fund’s returns.