Market Hits New Record High: Growth ETFs Top

After a month of volatile trading, the stock market reached new highs yet again as tensions over North Korea eased and damages from Hurricane Irma turned out less than feared (read: High-Momentum and Beta ETFs to Play on Fading Fears?).

Oil prices also rebounded after U.S. refineries resumed operations after Hurricane Harvey and hopes of an extension of the 15-month production pact between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers were raised.

Strong corporate earnings, still lower interest rates and the improving health of economies around the world are acting as tailwinds and driving the stock market. Additionally, the economy has been on a solid growth path buoyed by an impressive labor market, increase in wages, higher consumer spending and high consumer confidence.

All these events have returned the appeal of riskier assets. While the rally has been broad-based, growth stocks are easily leading the way. Notably, the ultra-popular growth fund QQQ has risen 23.7% since the start of the year compared with gains of 5.2% for the value fund IWD and 12.5% for the core fund (AX:SPY) .

This is especially true, as growth investing is basically a momentum play and a great strategy in a trending market (a market characterized by a prolonged uptrend). Growth stocks refer to high-quality stocks that are likely to witness higher revenues and earnings at a faster rate than the industry average. These stocks harness their momentum in earnings to create a positive bias in the market, resulting in rocketing share prices. As such, growth funds tend to outperform during an uptrend (read: Forget Geopolitics, Large-Cap Growth ETFs Still Strong Buys).

However, it is worth noting that these funds offer exposure to stocks with growth characteristics that have comparatively higher P/B, P/S and P/E ratios and exhibit a higher degree of volatility especially compared to value stocks.

Given this, we have highlighted six growth ETFs that hit their all-time highs in the last trading session. Any of these could be excellent plays for investors seeking to ride out the bullish trend in the months ahead given that these have Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

First Trust Large Cap Growth AlphaDEX Fund (LON:FTC)

This fund provides a slightly active choice as it uses the AlphaDEX methodology to select the stock. This approach results in a basket of 187 stocks with none accounting for more than 1.06% share. More than one-fourth of the portfolio is skewed toward information technology, followed by health care (17.2%), consumer discretionary (16.0%), financials (14.6%) and industrials (12.2%). The product has $652.9 million in AUM and charges 63 bps in annual fees. It hit an all-time high of $56.72 per share, representing a gain of about 15.7% in the year-to-date time frame.

iShares Core S&P U.S. Growth ETF IUSG

This product tracks the S&P 900 Growth Index and is home to 572 stocks with a slight tilt toward Apple (NASDAQ:AAPL) . Other firms hold less than 4.5% of the assets. Information technology is the top sector, accounting for one-third of the portfolio while health care, consumer discretionary and industrials get double-digit exposure each. The fund has accumulated $2.5 billion in its asset base and charges 5 bps in fees per year. It touched an all-time high of $50.39 per share, and has returned about 18.1% so far this year (read: Large Cap Growth ETF Hits New 52-Week High).

PowerShares Dynamic Large Cap Growth Portfolio PWB

This ETF follows the Dynamic Large Cap Growth Intellidex Index with a well-diversified portfolio of 50 stocks as none accounts for more than 3.5% of assets. Information technology takes the top spot at 43.5%, followed by health care (18.2%), consumer discretionary (14.3%) and industrials (10.5%). The product has accumulated $475.1 million in its asset base and charges 57 bps in fees per year. It reached its all-time high of $38.48 per share, and has added 20.8% so far this year.

Guggenheim S&P 500 Pure Growth ETF (AX:RPG)

This ETF offers exposure to the growth corner of the broad market by tracking the S&P 500 Pure Growth Index. It holds 116 securities in its basket, with none accounting for more than 2.93% of total assets. Here again, technology is the top sector with 31.4% allocation, followed by double-digit exposure each in consumer discretionary, health care and industrials. The fund has amassed $2.1 billion in its asset base and has expense ratio of 0.35%. The ETF scaled a fresh high of $99.08 per share, and has gained 18.8% in the year-to-date time frame.

Vanguard Mega Cap Growth ETF MGK

With AUM of $3.1 billion, this ETF offers diversified exposure to the largest growth stocks in the U.S. market by tracking the CRSP US Mega Cap Growth Index. It holds 138 securities in its basket with none accounting for more than 8.1% of total assets. It has key holdings in information technology, consumer services, health care, consumer goods and financials that account for double-digit exposure each. It charges 7 basis points in annual fees and has gained 21.2% in the year-to-date time frame, hitting a fresh high of $105.05 per share (read: If Dollar Remains Weak, Bet on These ETFs & Stocks).

iShares Russell Top 200 Growth ETF IWY

This fund offers exposure to 130 large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell Top 200 Growth Index. Like its peers, it is concentrated on the technology sector and the top firm, Apple, with 9.25% of the basket while the other firms hold no more than 6.2% share. Consumer discretionary, health care and industrials also receive double-digit allocation each. The fund has $1 billion in AUM and an expense ratio of 0.20%. IWY touched an all-time high of $67.88 per share representing a gain of 21.3% so far this year.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Apple Inc. (AAPL): Free Stock Analysis Report

NASDAQ-100 SHRS (QQQ): ETF Research Reports

SPDR-SP 500 TR (SPY (NYSE:SPY)): ETF Research Reports

PWRSH-DYN LC GR (PWB): ETF Research Reports

ISHARS-R T200 G (IWY): ETF Research Reports

GUGG-SP 500 PG (RPG): ETF Research Reports

ISHARS-CR USG (IUSG): ETF Research Reports

VANGD-MG CAP GR (MGK): ETF Research Reports

ISHARS-RS 1K VL (IWD): ETF Research Reports

FT-LC GROWTH (FTC): ETF Research Reports

Original post

Zacks Investment Research