Table Of Content
What Is a Growth ETF?
A growth ETF (Exchange-Traded Fund) is a fund that holds a diversified portfolio of stocks from companies expected to grow faster than the overall market.
These companies typically reinvest profits into innovation, expansion, or acquisitions rather than paying dividends.
Growth ETFs provide investors with exposure to sectors such as technology, healthcare, and consumer discretionary—areas known for rapid growth and higher potential returns.
Unlike value ETFs, which focus on undervalued companies with solid fundamentals, growth ETFs aim to capture capital appreciation.
-
Growth ETF vs. Value ETF: Key Differences
Feature | Growth ETF | Value ETF |
|---|---|---|
Investment Focus | Companies with high earnings/revenue growth | Undervalued companies with strong fundamentals |
Sectors Dominated | Technology, Healthcare, Consumer Discretionary | Financials, Utilities, Energy |
Dividend Yield | Low or none | Often higher dividends |
Volatility | Typically higher | Generally lower |
Example ETF | VUG (Vanguard Growth), QQQ (Invesco QQQ) | VTV (Vanguard Value), SCHV (Schwab Value) |
Best For | Long-term capital appreciation | Income + steady value investing |
How Does It Work?
A growth ETF works by tracking an index or a curated list of high-growth companies.
Fund managers or index providers select stocks based on metrics like earnings growth, revenue acceleration, and price momentum.
Investors buy shares of the ETF to gain indirect exposure to all the underlying companies in the fund.
-
Examples
For example, the Vanguard Growth ETF (VUG) holds companies such as Apple, Microsoft, and Nvidia. If these companies grow in value, the ETF’s price rises. Over the past decade, VUG has delivered strong returns, benefiting from the tech boom.
Another example is iShares Russell 1000 Growth ETF (IWF), which tracks large-cap U.S. growth stocks. It’s widely used in retirement accounts and long-term portfolios aiming for capital appreciation.
How Growth ETFs Select Stocks for Inclusion
Growth ETFs typically select stocks based on specific financial metrics and growth indicators.
These may include projected earnings growth, revenue acceleration, return on equity, and strong price momentum.
Fund managers or index providers use quantitative models to identify companies that are expanding faster than the market average.
Common criteria include:
3–5 year projected earnings growth
Revenue growth vs. industry averages
Positive analyst revisions or momentum scores
Limited or no dividend payouts
Popular Growth ETFs: Examples
Several growth ETFs stand out due to strong historical performance, diversified holdings, and consistent inflows. These funds typically focus on sectors like technology, healthcare, and consumer discretionary—industries driving innovation and long-term market expansion.
ETF | Expense Ratio | Top Sector | Style |
|---|---|---|---|
VUG | 0.04% | Tech | Passive |
IWF | 0.19% | Tech | Passive |
SPYG | 0.04% | Tech | Passive |
QQQ | 0.20% | Tech | Passive |
SCHG | 0.04% | Tech | Passive |
ARKK | 0.75% | Innovation | Active |
Here are some of the most widely used growth ETFs:
Vanguard Growth ETF (VUG): Tracks the CRSP U.S. Large Cap Growth Index; includes giants like Apple and Amazon.
iShares Russell 1000 Growth ETF (IWF): Focuses on large U.S. growth companies; heavily weighted in tech and communication.
SPDR Portfolio S&P 500 Growth ETF (SPYG): A low-cost option tracking growth stocks within the S&P 500.
Invesco QQQ Trust (QQQ): Tracks the Nasdaq-100; known for heavy exposure to top tech stocks like Microsoft and Nvidia.
Schwab U.S. Large-Cap Growth ETF (SCHG): Offers broad growth exposure with a low expense ratio.
ARK Innovation ETF (ARKK): Actively managed, high-risk fund focusing on disruptive innovation like AI and genomics.
Where To Buy Growth ETFs?
Buying growth ETFs is simple and can be accessed through online brokerage platforms. These brokers allow you to research, buy, and track ETFs in real time.
Most platforms charge no commissions on ETF trades and provide tools for long-term portfolio management.
Top platforms to consider:
Fidelity: No commissions, strong research tools, great for beginners and long-term investors.
Charles Schwab: Easy-to-use interface, robust ETF screening tools, and excellent customer service.
Robinhood: Commission-free trades with a mobile-first interface, ideal for active and younger investors.
Broker | Annual Fees | Best For |
|---|---|---|
E-Trade | 0% – 0.35%
0% on stocks and ETFs in self directed brokrage, 0.35% for Core Portfolio Robo Advisor
| Options & Futures Trading |
Interactive Brokers | 0% – 0.75%
$0 online commission on U.S. listed stocks and ETFs, Options: $0.15 – $0.65 per-contract, Futures: $0.25 – $0.85 per-contract. For Interactive Advisors: asset-based management fees of 0.10% to 0.75% | Professional Trading Tools |
Fidelity | 0% – 1.04%
Fidelity Go® Robo advisor: $0: under $25,000, 0.35%/yr: $25,000 and above
Fidelity® Wealth Management dedicated advisor: 0.50%–1.50%
Fidelity Private Wealth Management® advisor-led team: 0.20%–1.04%
| Retirement Account Investing |
Vanguard | Up to 0.30%
$0 online commission on U.S. listed stocks, mutual funds and ETFs, options: $0.65 per-contract, Vanguard Digital Advisor – 0.015%, Vanguard Personal Advisor: 0.03%, Vanguard Personal Advisor Select: up to 0.03%, Vanguard Wealth Management: up to 0.03% | Low-Cost ETF Investors |
J.P. Morgan Self Investing | $0
$0 online commission on U.S. listed stocks and ETFs and $0.65 per-contract | Chase Bank Customers |
Charles Schwab | Up to 0.80%
$0 online commission on U.S. listed stocks, mutual funds and ETFs, options: $0.65 per-contract, Schwab Intelligent Portfolio – 0%, Schwab Intelligent Portfolios Premium – One-time planning fee: $300 + Monthly advisory fee: $30, Schwab Wealth Advisory: up to 0.80% | Advanced Trading Tools |
Merrill Edge | 0.45% – 0.85%
0.45% for Merrill Robo Advisor (Guided Investing), 0.85% for Investing With An Advisor | Bank of America Clients |
FAQ
Growth ETFs can be more volatile than other types of funds, especially during market downturns. They’re heavily tied to investor sentiment and sector performance, particularly in tech.
Most growth ETFs pay little or no dividends, since they invest in companies that reinvest profits back into expansion instead of distributing them to shareholders.
Rebalancing typically occurs quarterly or semi-annually, depending on the ETF’s structure. This helps maintain its growth-oriented focus.
Growth ETFs may suffer larger losses during downturns due to their exposure to high-valuation stocks. However, long-term investors often ride out the volatility.
Yes, there are ETFs focused on international growth markets, offering exposure to high-growth companies outside the U.S.
They’re taxed like other ETFs—capital gains apply when you sell, and any dividends (if paid) are taxable, unless held in a tax-advantaged account.
During specific periods, especially when tech and innovation stocks surge, growth ETFs can outperform broad market indices like the S&P 500.
Some do. While many focus on large-cap stocks, others specifically target small- or mid-cap growth companies.
