Is the Vanguard Growth ETF the Best Growth ETF You Can Buy Right Now? Here’s What the Data Says.

Legendary investor Warren Buffett popularized the concept of value investing, which supported Berkshire Hathaway‘s tremendous success over the decades. However, investing in growth stocks is perhaps a more exciting way to allocate capital. This usually involves owning companies benefiting from secular trends that can result in sizable revenue and profit gains.

There are ways to adopt the latter strategy without picking individual stocks. The Vanguard Growth ETF (VUG +0.48%) is a top choice. But is this exchange-traded fund (ETF) the best growth investment vehicle you can buy right now? Here’s what the data suggests.

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Look at these key pieces of information

For starters, the Vanguard Growth ETF excels in one important category. Offered by Vanguard, a reputable asset manager with a storied history, this ETF carries a very low expense ratio of just 0.03%. Let’s say you invest $10,000. Of that starting sum, Vanguard will take roughly $3 in the first year. This means you keep more of your money over time.

While the fee is important, investors pay the most attention to performance. In the past decade, the Vanguard Growth ETF has generated a total return of 411% (as of July 9). This performance is significantly better than the S&P 500 index’s 315% total return during the same time period.

Based on these two critical data points, this is the best growth ETF to buy. Investors might consider Cathie Wood’s Ark Innovation ETF. However, this highly publicized product has meaningfully underperformed the Vanguard Growth ETF in the last 10 years, and its expense ratio of 0.75% is much higher.

Today’s Change

(0.48%) $0.42

Current Price

$87.40

Key Data Points

AUM

$394B

Dividend Yield

1.80%

Expense Ratio

0.03%

Top Holdings

NVDA

13.10%

AAPL

12.32%

MSFT

8.99%

It comes down to personal preference

It’s difficult to argue with the Vanguard Growth ETF’s fee and performance. But the best growth ETF depends on an individual investor’s personal preference.

If you choose to buy the Vanguard Growth ETF, it’s worth taking the time to understand what you own. The technology sector alone represents almost 70% of the portfolio. Nvidia, Apple, and Microsoft combine to make up over 34% of the holdings. You must be bullish on these massive enterprises going forward, and you have to be optimistic about the potential for artificial intelligence to propel their earnings higher over time.

There are certainly investors who want less exposure to these large companies. The iShares Russell Mid-Cap Growth ETF and Vanguard Small-Cap Growth ETF might be good choices if this strategy sounds interesting to you.