- Vanguard has the most net inflows of any ETF provider so far this year
- Its growth ETFs have been in high demand and posted stellar returns
- Here are the three best Vanguard ETFs for growth investors
Vanguard has been the most popular option for ETFs so far in 2024. Vanguard ETFs have had the most inflows year-to-date of any fund family, and the company is closing the gap on the largest ETF manager, BlackRock (NYSE:BLK).
Through July 5, according to ETF.com, Vanguard has had $124.7 billion in net inflows into its ETFs, more than any other shop, including BlackRock, which has had $100.3 billion in net inflows since the start of the year.
Vanguard now has $2.68 trillion in ETF assets under management, second only to BlackRock at $2.86 trillion.
The company currently offers 86 different ETFs covering a range of investment styles and classes. Its growth ETFs have been in high demand this year, and these are the three best Vanguard ETFs for growth investors:
1. Vanguard Information Technology ETF
The Vanguard Information Technology ETF (NYSE:VGT) has been the best long-term performer in the Vanguard ETF family.
Over the past 10 years, this Vanguard ETF has had an average annual return of 21% per year as of June 30. That beats the Nasdaq 100, the Nasdaq Composite, and the S&P 500 over the same period.
Year-to-date, it has returned 24%, which also beats the benchmarks, and since its inception in 2004, it has an average annualized return of 13.6%.
The ETF tracks the performance of the MSCI US Investable Market Index/Information Technology 25/50, comprised of large, mid-, and small-cap stocks within the information technology sector, as classified under the Global Industry Classification Standard (GICS). That includes hardware, software, communications equipment, and semiconductor companies, among others.
It currently holds 321 stocks, and its top three positions are Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and NVIDIA (NASDAQ:NVDA). It has an average P/E ratio of 36, and, as is customary of most Vanguard ETFs, it has a low expense ratio of 0.10%.
2. Vanguard Russell 1000 Growth ETF
The Vanguard Russell 1000 Growth ETF (NASDAQ:VONG) is another stellar growth ETF from Vanguard. As the name suggests, it tracks growth stocks within the Russell 1000 index, which means it includes both large- and mid-cap growth stocks across sectors.
The ETF holds some 442 growth stocks, with an average P/E ratio of 32. Some 55% of the portfolio is in technology stocks, followed by consumer discretionary stocks at 18% and healthcare stocks at 10%.
The top three holdings are Microsoft, Apple, and NVIDIA, but this fund is more broadly diversified than the Vanguard Information Technology ETF.
Over the last 10 years, it has had an average annualized return of 16.2% as of June 30. Year-to-date, the ETF has returned 25.4% and generated an average annualized return of 16.8% since inception in 2010. It also has a low expense ratio of just 0.08%.
3. Vanguard Mega Cap Growth ETF
The Vanguard Mega Cap Growth ETF (NYSE:MGK) might be considered Vanguard’s answer to the popular Invesco QQQ (NASDAQ:QQQ), which tracks the Nasdaq 100.
The Vanguard Mega Cap Growth ETF does not mirror the Nasdaq 100, but it is similarly concentrated on large-cap tech stocks. It follows the CRSP US Mega Cap Growth Index, which includes the 78 largest growth stocks in U.S. markets with a median market cap of $1.8 trillion.
About 61% of the portfolio is in technology stocks, while 20% is in consumer discretionary names and 7% is in healthcare. So, of course, the three largest holdings are going to be the same as the other two funds on this list.
The difference is this ETF is far more concentrated, with just 78 holdings, so the returns could be more volatile in the short term. The average P/E ratio is 38, which is higher than the other two.
But it has had excellent returns over the long term, posting an average annualized return of 16.2% over the past 10 years. This tops the S&P 500 and Nasdaq Composite over that stretch but falls just short of the Nasdaq 100.
However, year-to-date and over the past one-year period ended July 10, it has been the best performer among the Vanguard growth ETFs. It has returned 26% YTD and a massive 41% for the one-year period ended July 10. Further, it has a miniscule expense ratio of 0.07%.
Great Long-Term Options
These are considered very safe, but be mindful that they are long-term investments that may fluctuate wildly from year to year, depending on the market. But over time, the highs have outweighed the lows, which shows in the stellar long-term performance for each of these ETFs.
Investors should know, however, that these types of aggressive growth funds should only be a fraction of a larger, diversified portfolio that is properly balanced to navigate market volatility and perform well over time.