Do you want more exposure to growth stocks but aren't interested in keeping tabs on a bunch of different growth stories? You're not alone. And, good news! There are several growth exchange-traded funds (or ETFs) that are up to the task.
Here's a closer look at three of them to buy and hold forever if you've got an extra $2,000 to work with right now. (Note that each one has its own unique characteristics, by the way, so simultaneously owning all three wouldn't be strategically unsound.)
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Vanguard Information Technology ETF
There's no denying that technology stocks have led the market for nearly three decades now. And for good reason. Tech companies have introduced the world's most game-changing developments like personal computers, mobile broadband, and artificial intelligence. The technology sector is likely to maintain this pace of cultural-leading progress into the distant future, too, if not in perpetuity. It's just the nature of the business.
To date the Invesco QQQ Trust has adequately served as a proxy for the cutting-edge sliver of the tech sector. The top-performing technology names like Nvidia, Microsoft, and Apple, as it turns out, all happen to be constituents of the Nasdaq-100 index that the Invesco ETF is meant to mirror. This may not always be the case though. The next great tech names may end up being listed on the New York Stock Exchange.
Owning a stake in the Vanguard Information Technology ETF (NYSEMKT:VGT) works around this problem. Although it does hold Nasdaq-listed technology stocks, it's based on the MSCI US Investable Market Information Technology 25/50 Index that consists made up of large-, mid-, and small-cap tech names regardless of where they're listed. While the aforementioned Nvidia, Microsoft, and Apple are still this fund's biggest constituents, compelling non-Nasdaq stocks like Salesforce, Accenture, and ServiceNow, just to name a few, are also fairly represented in the mix.
It may not matter much when all is said and done. Nasdaq-listed technology stocks could end up being the only ones you need to secure above-average long-term sector-based gains. Better to have balanced exposure to the industry and not need it, though, than need it and not have it.
iShares S&P 500 Growth ETF
For the same reason you might want to own the Vanguard Information Technology ETF instead of Invesco QQQ Trust, growth-seeking investors may want to consider holding a position in the iShares S&P 500 Growth ETF (NYSEMKT:IVW) rather than going all-in on the more broad-based SPDR S&P 500 ETF Trust.
Just as the name suggests, the iShares Growth fund only holds S&P 500 constituents that are categorized as growth names. While the number's not etched in stone, there are just a little over 200 qualifying stocks at this time. These names of course include the aforementioned Nvidia and Apple, but also Facebook parent Meta Platforms. Alphabet and Amazon are in the mix as well.
It looks and sounds a lot like Invesco QQQ Trust, or for that matter, the Vanguard Information Technology ETF. The iShares fund is markedly different in one important way, however. The S&P 500 Growth Index that it's based upon is arguably better balanced than either alternative.
Although still top-heavy with megacap names like Nvidia and Apple, Standard & Poor's uses a modified cap-weighting approach to index-building, which prevents the indexes from becoming dangerously lopsided. For example, while Nvidia is unsurprisingly this ETF's biggest position (by far) right now, the next-nearest Apple, Meta, and Microsoft are all similarly sized within the index (and fund) even though these companies' market caps aren't particularly close to one another at this time.
It's once again one of those little details that may end up not mattering in the end. If you're truly looking for "forever" growth holdings though, it can't hurt to use this modest nuance to your advantage. If nothing else it will make this fund less volatile, and therefore easier to stick with when things get rocky.
iShares Russell Mid-Cap Growth ETF
Finally, while most of your attention as an investor will be devoted to large caps, there's a strong case to be made for diversifying beyond these familiar names. Specifically, you'd be wise to add some mid-cap exposure to your portfolio, and mid-cap growth exposure in particular.
But why? In a word, performance. Given enough time, mid-cap stocks outperform the S&P 500, while mid-cap growth stocks outpace their large-cap counterparts.
This actually makes a lot of sense when you think about it. Whereas most large-cap companies' easy and rapid growth is in the rearview mirror while many small-cap companies are still on shaky footing, midsize companies are in something of a sweet spot in their existence. They've proven their product or service is marketable.
However, they've yet to reach all their prospective customers -- or profitability. They're moving in the right direction though. SoundHound AI, IonQ, Nuscale Power, and AST SpaceMobile are just a few examples of compelling mid-size growth companies with stocks that have been on fire lately as their potential becomes clearer. The trick is simply holding on through the volatility they still dish out.
That, or just buying a basket of mid-cap growth stocks in the form of an exchange-traded fund that will tamp down this volatility and let you plug into a premise rather than forcing you to find and monitor off-the-radar stocks. The iShares Russell Mid-Cap Growth ETF (NYSEMKT:IWP) will do nicely, although the iShares S&P Mid-Cap 400 Growth ETF (NYSEMKT:IJK) would work just about as well.
You wouldn't even really need to limit yourself to the growth sliver of this market cap group either. You'd still likely beat the market with a more broad-based option like the Vanguard S&P Mid-Cap 400 ETF (NYSEMKT:IVOO) or the iShares Core S&P Mid-Cap ETF (NYSEMKT:IJH), both which of course include mid-cap value tickers. Even these non-growth mid-cap stocks perform quite well as a group when given enough time.
Should you invest $1,000 in Vanguard World Fund - Vanguard Information Technology ETF right now?
Before you buy stock in Vanguard World Fund - Vanguard Information Technology ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard World Fund - Vanguard Information Technology ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $823,858!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 21, 2025
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Accenture Plc, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Salesforce, and ServiceNow. The Motley Fool recommends NuScale Power and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
/Advanced%20Micro%20Devices%20Inc_%20office%20sign-by%20Poetra_RH%20via%20Shutterstock.jpg)
/Alphabet%20(Google)%20Image%20by%20Markus%20Mainka%20via%20Shutterstock.jpg)
