Like Growth Stocks? Consider Buying These 3 ETFs

NYSE: VUG | Vanguard Growth ETF News, Ratings, and Charts

Even though the worst of the coronavirus pandemic may perhaps be behind us, many of the issues and challenges it presented in 2020 persist. While many believe that an expected economic recovery will lead to some rotation away from growth stocks into value stocks, the pandemic-led change in consumer behavior may continue to favor growth stocks this year.

In addition to a new Presidential administration, a slower-than-anticipated pace of COVID-19 vaccinations, and the emergence of a new coronavirus strain might create stock market uncertainty in the coming months. In fact, many analysts expect the market to witness another correction in the near term.

As a result, betting on individual growth stocks could be risky at this juncture. ETFs could help you mitigate this risk because they offer broad and diversified exposure at minimal operating costs.

Here are three ETFs that we think are positioned to gain this year, even though they delivered solid returns in 2020: Vanguard Growth ETF (VUG), iShares Russell 1000 Growth ETF (IWF), and Vanguard Small-Cap ETF (VB).

Vanguard Growth ETF (VUG)

VUG is a passively managed ETF that delivers broad exposure to U.S. large-cap growth firms. The fund tracks the CRSP U.S. Large Cap Growth Index, which selects stocks based on six growth factors – expected long-term growth in EPS, expected short-term growth in EPS, three-year historical growth in EPS, three-year historical growth in sales per share, current investment-to-assets ratio, and return on assets.

VUG has an MSCI ESG Fund Rating of BBB based on a score of 4.47 out of 10. The ETF has $66.95 billion in AUM currently an expense ratio of 0.04%. VUG also pays an annual dividend of $1.68, which represents a 0.65% yield.

VUG is exposed to various industries, with Information Technology leading the way with a 46.2% weighting. The index also has a 23% exposure to the Consumer Discretionary sector and a 13% exposure to the Industrials sectors. The top three among the fund’s 57 holdings are Apple, Inc. (AAPL), Microsoft Corporation (MSFT), and Amazon.com (AMZN).

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