7 Best Growth ETFs to Buy and Hold | The Motley Fool (2024)

The best long-term ETFs allow investors to easily build a diversified portfolio because they provide broad exposure across many asset classes, industries, and geographies. This diversification can help an investor reduce risk without sacrificing long-term returns.

There are many exchange-traded funds (ETFs) built for long-term investors. Here's a closer look at several top ETFs that make ideal buy-and-hold investments.

Definition Icon

Exchange-Traded Fund (ETF)

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.

7 Best Growth ETFs to Buy and Hold | The Motley Fool (1)

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Best long-term ETFs

The bestETFs for the long term hold a diversified portfolioof stocks while charging a very lowETF expense ratio. Although many funds share those two key characteristics, here are the top ETFs for long-term investors:

1. Vanguard S&P 500 ETF

TheVanguard S&P 500 ETF(VOO -1.63%) is anindex funddesigned to track the. The index represents 500 of the largest U.S. publicly traded companies. The ETF's goals are to closely follow the , the primary benchmark for the overall returns of the U.S. stock market.

It offers investors a high potential for investment growth, making it an ideal long-term investment.Over the last 50 years, the average stock market return was 9.4% annually, as measured by the S&P 500. The Vanguard S&P 500 ETF has only slightly underperformed that benchmark's returns since its inception.

Like the S&P 500, the ETF uses a market weight strategy, giving a higher weighting to the largest companies. As a result, its top 10 holdings made up more than 25% of its total net assets in early 2023, giving investors relatively concentrated exposure to the largest companies in the index.

The ETF offers investors exposure to the largest U.S. stocks for a very low cost. Its ETF expense ratio of 0.03% is significantly below the industry average expense ratio of 0.24%. In other words, investors would only pay $3 in annual management fees per $1,000 invested in the ETF, compared to $24 per year for every $1,000 invested in the average ETF.

2. Invesco S&P 500 Equal Weight ETF

TheInvesco S&P 500 Equal Weight ETF (RSP -1.28%) is also an index fund designed to track the stocks in the S&P 500. However, it uses an equal weight approach instead of one based on market cap. As a result, the ETF's top 10 holdings represent less than 3% of its total assets.

This approach reduces concentration risk by providing broad exposure across the 500 stocks in the S&P 500. The ETF rebalances its holdings quarterly to ensure each holding remains a relatively equal portion of the fund's assets.

The ETF has a relatively low expense ratio of 0.2%. That's a reasonable fee to gain broad, equal-weight exposure to 500 of the largest public companies in the U.S.

Definition Icon

Gross Expense Ratio

The gross expense ratio is the percentage of an investment that goes toward fees before discounts have been applied.

3. iShares Russell 1000 Growth ETF

TheiShares Russell 1000 Growth ETF(IWF -2.12%) provides exposure to U.S. companies expected to increase their earnings at an above-average rate compared to the broader stock market.The fund held shares of slightly more than 500 companies as of early 2023.

The ETF takes a market-weighted approach. Its top 10 holdings made up about 45% of its total assets. Given its growth focus, technology stockscomprised a significant portion of the fund's holdings at more than 40% in early 2023.

The ETF charges investors a reasonable expense ratio of 0.18%. That's a fair price to pay to gain long-term exposure to growth stocks.

4. Vanguard Real Estate ETF

TheVanguard Real Estate ETF (VNQ -0.96%) invests in real estate stocks, with a focus on real estate investment trusts (REITs). These entities typically own income-producing commercial real estate such as apartments, office buildings, retail properties, and industrial complexes.

As of early 2023, theREIT ETFhad 166 total holdings. The top 10 made up more than 45% of its assets. However, it's worth noting that its largest holding was a real estate index fund also managed by Vanguard, which helped reduce its overall concentration.

The fund charges a relatively low fee of 0.12%, making it an inexpensive way to gain exposure to the real estate market, which has historically been an excellent long-term investment.

5. Schwab U.S. Dividend Equity ETF

TheSchwab U.S. Dividend Equity ETF(SCHD -1.23%) tracks an index focused on holdingdividend stocksknown for the quality and sustainability of theirdividend payments. The ETF enables investors to benefit from the power of dividends in producing attractive total returns for investors over the long term.

The ETF held shares of more than 100 dividend-paying stocks in early 2023. The fund offered adividend yieldof around 3.5%, about double that of the S&P 500.

Its top 10 holdings made up more than 40% of the total. Meanwhile, its overall holdings are weighted heavily in thefinancial sector(20.4% of the fund's holdings) and tech stocks (21%).

The ETF charges an ultra-low expense ratio of 0.06%, letting investors keep a significant portion of the dividend income generated by its holdings. These features make the ETF a very low-cost way to collect passive income via dividend stocks, which have historically been exceptional long-term investments.

6. iShares Core MSCI EAFE ETF

TheiShares Core MSCI EAFE ETF(IEFA -0.48%) is an ETF focused oninternational stocks. It provides investors with broad exposure to companies in Europe, Australia, and Asia, enabling investors to add some international diversification to their portfolio, which has outstanding long-term growth potential.

The ETF held shares of more than 3,000 stocks as of early 2023. It provides fairly broad exposure to global stocks, with its top 10 holdings making up about 13% of its net assets. The ETF is also reasonably diversified by sector and geography:

Data source: iShares. Accurate as of April 12, 2023.
Top 5 SectorsTop 5 Geographies
Financials (17.2% of the fund's holdings)Japan (22.4%)
Industrials (16.2%)United Kingdom (14.9%)
Healthcare (12.4%)France (11.2%)
Consumer discretionary (12.0%)Switzerland (9.3%)
Consumer staples (9.9%)Germany (8.0%)

The iShares Core MSCI EAFE ETF charges a very low expense ratio of 0.07%, making it a low-cost way for investors to add some international exposure to their portfolios to benefit from the long-term growth of the global economy.

7. iShares Core Growth Allocation ETF

TheiShares Core Growth Allocation ETF(AOR -0.51%) offers investors a simple way to build a diversified portfolio focused on long-term growth across several asset classes through one single ETF. The fund provides investors with exposure to a broad mix of bonds and global stocks by holding seven ETFs:

  • iShares Core Total USD Bond Market (IUSB 0.96%): This U.S.-focused bondETF totaled 32.8% of the fund's holdings.
  • iShares Core S&P 500 ETF(IVV -1.64%): This S&P 500 index fund made up 31.9% of the ETF's assets.
  • iShares Core MSCI International Developed Markets ETF(IDEV -0.57%) This international ETF focused on developed markets accounted for 19.7% of its assets.
  • iShares Core MSCI Emerging Markets(IEMG -0.45%) This emerging markets-focused ETF made up 7.1% of the fund's assets.
  • iShares Core International Aggregate Bond ETF (IAGG 0.36%): This international bond ETF comprised 5.3% of the fund's assets.
  • iShares Core S&P Mid-Cap ETF(IJH -1.86%): Thismid-cap stock-focused ETF accounted for 2% of the fund's assets.
  • iShares Core Small-Cap ETF(IJR -2.54%): Thissmall-cap stock-focused ETF totaled 0.8% of the fund's assets.

The ETF allows investors to easily set up a balanced long-term portfolio, helping to reduce their risk profile while still delivering attractive returns. It charges investors a reasonable fee of 0.15% after adjusting for the fees and associated waivers on the ETFs in the fund.

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Why ETFs are good for long-term investors

ETFs can be great building blocks for long-term investors. They can provide broad exposure to market sectors, geographies, and industries and help investors quickly diversify their portfolios while reducing their overall risk profile.

The best long-term ETFs provide this exposure for a relatively low expense ratio. The low cost allows investors to earn returns roughly matching the underlying index that the funds aim to track over the long term.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF, Vanguard Specialized Funds - Vanguard Real Estate ETF, and iShares Trust - iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.

About Me

I'm a knowledgeable and enthusiastic expert in the field of long-term investing and exchange-traded funds (ETFs). I have a deep understanding of the concepts and strategies involved in building a diversified portfolio for long-term investment. My expertise is demonstrated through a comprehensive understanding of various ETFs, their underlying assets, expense ratios, and historical performance. I can provide valuable insights and guidance to help investors make informed decisions about long-term investments in ETFs.

Concepts Related to Long-Term ETFs

Exchange-Traded Fund (ETF): An exchange-traded fund allows investors to buy many stocks or bonds at once. ETFs provide broad exposure across many asset classes, industries, and geographies, enabling investors to easily build a diversified portfolio. They are ideal for long-term investors seeking to reduce risk without sacrificing long-term returns. ETFs typically charge a very low expense ratio, making them cost-effective investment options. [[1]]

Gross Expense Ratio: The gross expense ratio is the percentage of an investment that goes toward fees before discounts have been applied. It is an important factor to consider when evaluating the cost-effectiveness of an ETF. Low expense ratios are desirable for long-term investors as they can help maximize returns over time. [[2]]

Vanguard S&P 500 ETF (VOO): This ETF is an index fund designed to track the S&P 500, representing 500 of the largest U.S. publicly traded companies. It offers high potential for investment growth and has a remarkably low expense ratio of 0.03%, significantly below the industry average. The ETF provides investors with exposure to the largest U.S. stocks at a very low cost. [[3]]

Invesco S&P 500 Equal Weight ETF (RSP): This ETF also tracks the stocks in the S&P 500 but uses an equal weight approach instead of one based on market cap. It aims to reduce concentration risk by providing broad exposure across the 500 stocks in the S&P 500. The ETF has a reasonable expense ratio of 0.2%. [[4]]

iShares Russell 1000 Growth ETF (IWF): This ETF provides exposure to U.S. companies expected to increase their earnings at an above-average rate compared to the broader stock market. It charges investors a reasonable expense ratio of 0.18% and focuses on growth stocks, with technology stocks comprising a significant portion of its holdings. [[5]]

Vanguard Real Estate ETF (VNQ): This ETF invests in real estate stocks, with a focus on real estate investment trusts (REITs). It charges a relatively low fee of 0.12% and offers investors an inexpensive way to gain exposure to the real estate market, which has historically been an excellent long-term investment. [[6]]

Schwab U.S. Dividend Equity ETF (SCHD): This ETF tracks dividend stocks known for the quality and sustainability of their dividend payments. It charges an ultra-low expense ratio of 0.06% and provides investors with a very low-cost way to collect passive income via dividend stocks, which have historically been exceptional long-term investments. [[7]]

iShares Core MSCI EAFE ETF (IEFA): This ETF focuses on international stocks, providing investors with broad exposure to companies in Europe, Australia, and Asia. It charges a very low expense ratio of 0.07% and offers a low-cost way for investors to add some international exposure to their portfolios to benefit from the long-term growth of the global economy. [[8]]

iShares Core Growth Allocation ETF (AOR): This ETF offers investors a simple way to build a diversified portfolio focused on long-term growth across several asset classes through one single ETF. It holds seven ETFs, providing exposure to a broad mix of bonds and global stocks. The ETF charges investors a reasonable fee of 0.15% after adjusting for the fees and associated waivers on the ETFs in the fund. [[9]]

These concepts and ETFs are essential for long-term investors seeking to build a diversified portfolio with exposure to various asset classes, industries, and geographies while minimizing costs and maximizing long-term returns. If you have any specific questions about these concepts or ETFs, feel free to ask for further insights and guidance!

7 Best Growth ETFs to Buy and Hold | The Motley Fool (2024)

FAQs

What are the top 5 ETFs for 2024? ›

One metric that investors often look to is trailing one-month performance. The top ETFs for equities, bonds, fixed income, commodities, and currencies for April 2024 based on this metric include CRPT, FCVT, EMHY, DBA, and UUP.

What are the top 5 ETFs to buy? ›

Best ETFs as of April 2024
TickerFund name5-year return
SMHVanEck Semiconductor ETF35.02%
SOXXiShares Semiconductor ETF30.70%
XLKTechnology Select Sector SPDR Fund24.57%
IYWiShares U.S. Technology ETF24.09%
1 more row
Mar 29, 2024

What is the best ETF for growth? ›

Compare the best growth ETFs
FUND(TICKER)EXPENSE RATIO10-YEAR RETURN AS OF APRIL 1
Vanguard Growth ETF (VUG)0.04%15.07%
iShares Russell 1000 Growth ETF (IWF)0.19%15.78%
iShares S&P 500 Growth ETF (IVW)0.18%14.34%
Schwab U.S. Large-Cap Growth ETF (SCHG)0.04%15.95%
3 more rows

What are Motley Fool 10 best stocks? ›

The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

Which ETF has the highest 10 year return? ›

Best ETFs 10 Years
SymbolETF Name10y Chg 4-2-24
SOXXiShares Semiconductor ETF873%
PSIInvesco Semiconductors ETF786%
METARoundhill Ball Metaverse ETF717%
XSDSPDR S&P Semiconductor ETF617%
17 more rows

Which ETF will grow the most in 2024? ›

3 Great Growth ETFs for 2024
  • Schwab U.S. Large-Cap Growth ETF SCHG.
  • Vanguard International Dividend Appreciation ETF VIGI.
  • iShares MSCI USA Quality ETF QUAL.
Mar 26, 2024

What are the top three ETFs? ›

Top U.S. market-cap index ETFs
Fund (ticker)YTD performance5-year performance
Vanguard S&P 500 ETF (VOO)10.4 percent15.0 percent
SPDR S&P 500 ETF Trust (SPY)10.4 percent15.0 percent
iShares Core S&P 500 ETF (IVV)10.4 percent15.0 percent
Invesco QQQ Trust (QQQ)8.6 percent20.7 percent

Which ETF has the highest return? ›

100 Highest 5 Year ETF Returns
SymbolName5-Year Return
FNGUMicroSectors FANG+™ Index 3X Leveraged ETN47.32%
FNGOMicroSectors FANG+ Index 2X Leveraged ETNs45.47%
TECLDirexion Daily Technology Bull 3X Shares39.37%
SOXLDirexion Daily Semiconductor Bull 3x Shares32.95%
93 more rows

What is the number one traded ETF? ›

Most Popular ETFs: Top 100 ETFs By Trading Volume
SymbolNameAvg Daily Share Volume (3mo)
SPYSPDR S&P 500 ETF Trust72,794,695
TQQQProShares UltraPro QQQ71,590,445
SOXLDirexion Daily Semiconductor Bull 3x Shares71,181,070
FXIiShares China Large-Cap ETF45,738,055
96 more rows

Which Vanguard ETF is best for growth? ›

Vanguard Dividend Appreciation ETF (VIG)

Instead of focusing on high-yielding dividend stocks, this ETF focuses on ETFs that have historically grown their dividends consistently. It offers the same low fees as VYM does with a 0.06% expense ratio and pays a 1.7% 30-day SEC yield.

What is the best ETF to buy in 2024? ›

Top 7 ETFs to buy now
ETFTickerAssets Under Management (AUM)
Invesco QQQ Trust(NASDAQ:QQQ)$259.6 billion
Vanguard Growth ETF(NYSEMKT:VUG)$118.8 billion
iShares Core S&P Small-Cap ETF(NYSEMKT:IJR)$79.8 billion
iShares Core Dividend Growth ETF(NYSEMKT:DGRO)$27.16 billion
3 more rows
Apr 1, 2024

What is an aggressive growth ETF? ›

Overview. The Morningstar Aggressive Growth ETF Asset Allocation Portfolio seeks to provide investors with capital appreciation. The Portfolio seeks to achieve its objective by investing in exchange-traded funds (ETFs) that invest primarily in equity securities of large, medium and small sized companies.

What are Motley Fool's double down stocks? ›

"Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.

What is Motley Fool's all in buy alert? ›

So what do they mean by this “All In” buy signal? Basically, it just means a stock that they like so much, they've recommended it more than once. Not necessarily that this second (or third, or fourth) recommendation has been made today, or this week, but, you know, sometime.

What are Motley Fools rule breaker stocks? ›

The Motley Fool Rule Breakers is a newsletter for the “high-growth” investor. But what do we mean by “high-growth” stocks? Growth stocks are mainly companies selling more goods and services each year, typically in a new or emerging industry.

What is the best investment in 2024? ›

11 best investments right now
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Bonds.
  • Money market funds.
  • Mutual funds.
  • Index Funds.
  • Exchange-traded funds.
  • Stocks.
Mar 19, 2024

What is best mutual fund to invest in 2024? ›

Best flexi cap schemes to invest in April 2024
  • Parag Parikh Flexi Cap Fund.
  • UTI Flexi Cap Fund.
  • PGIM India Flexi Cap Fund.
  • Aditya Birla Sun Life Flexi Cap Fund.
  • SBI Flexi Cap Fund.
  • Canara Robeco Flexi Cap Fund.
3 days ago

What are the best ETFs for February 2024? ›

In February 2024, the top-performing stock ETFs included mid-cap growth fund Renaissance IPO ETF and Invesco S&P MidCap 400 Pure Growth ETF. The month's worst performers included Global X SuperDividend US ETF and Franklin US Low Volatility High Dividend Index ETF.

What is the best ETF for January 2024? ›

Here Are the "Magnificent Seven" ETFs to Buy in 2024 – Which Is Best for You?
  • Vanguard Total Stock Market ETF. ...
  • Vanguard S&P 500. ...
  • Vanguard Total International Stock ETF. ...
  • Vanguard Total Bond Market ETF. ...
  • Invesco QQQ Trust. ...
  • Vanguard Growth ETF Shares. ...
  • Vanguard Developed Markets ETF.
Mar 12, 2024

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