Title: Two Standout Vanguard ETFs for Long-Term Growth Investors to Consider
The S&P 500 is having an outstanding year, with a 27% increase as of Monday's close. Over the past five years, this broad index has nearly doubled in value. However, some investors might question if the stock market is getting too hot, potentially leading to a market slowdown or even a bear market.
Growth investors might want to consider a safer approach by investing in exchange-traded funds (ETFs) that are less dependent on a single investment and can still generate strong returns over time. Two top Vanguard ETFs for growth investors are the Vanguard Growth Index Fund ETF (VUG 0.15%) and the Vanguard Mid-Cap Growth Index Fund ETF (VOT 0.21%).
Vanguard Growth Index Fund
The Vanguard Growth Index ETF is appealing due to its 0.04% expense ratio and heavy tech exposure (58%), which includes top holdings such as Apple, Nvidia, and Microsoft. By investing in this ETF, you're not overly dependent on any single stock and are still positioned for strong returns in the long run. Its five-year growth has more than doubled the S&P 500's performance.
Vanguard Mid-Cap Growth Index Fund ETF
For growth investors seeking more upside, the Mid-Cap Growth Index Fund might be an attractive option. Focusing on mid-cap stocks, this ETF has the potential for significant growth in the long run given their generally lower valuations.
The fund contains 140 stocks, with a median market cap of just under $38 billion. While diversified, tech stocks make up 23% of its holdings, followed by industrials, consumer discretionary, and healthcare. The fund's largest holding, Palantir Technologies, has a minimal impact on the fund's performance due to its low weight.
Though the fund has underperformed in recent years, it might be a matter of time before growth investors target more upside opportunities in mid-cap stocks.
When considering these two ETFs in potential market slowdowns or bear markets, their diversified portfolios, historical performance, low costs, consistency, tax efficiency, and reduced manager risk make them attractive options for long-term growth investors. Dollar-cost averaging can also be beneficial for those investing in these ETFs.
Investors looking to mitigate risks in the face of potential market volatility might consider allocating a portion of their finance to ETFs like the Vanguard Growth Index Fund. This fund, with its heavy tech exposure and diversified portfolio, has historically generated strong returns, even outperforming the S&P 500 over the past five years.
Moreover, for those seeking higher growth potential, the Vanguard Mid-Cap Growth Index Fund could be an intriguing choice. This ETF, despite underperforming recently, focuses on mid-cap stocks and has the potential for significant long-term growth due to their typically lower valuations.
