Many growth stocks and exchange-traded funds (ETFs) are currently changing hands around 52-week or even multi-year lows and the impending earnings season could bring more volatility to markets.
However, research suggests that:
“Stocks lose 36% on average in a bear market. By contrast, stocks gain 114% on average during a bull market.”
Put another way, investing in robust growth shares is crucial to create long-term wealth. So, here are two ETFs that are worth a look in Q3.
1. Vanguard S&P 500 Growth Index Fund ETF Shares
- Current Price: $223.82
- 52-week range: $208.10 – $306.64
- Dividend yield: 0.79%
- Expense ratio: 0.10% per year
The Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:), which was first listed in September 2010, invests in growth shares in the . Criteria include EPS, sales growth, and price momentum. Its net assets are $6.9 billion.
VOOG, which tracks the S&P 500 Growth Index, holds 240 stocks in sectors including information technology, IT (44.10%), consumer discretionary (15.80%), communication services (11.30%), health care (11.80%), financials (7.0%), consumer staples (1.60%) and energy (1.30%).
During the pandemic, we all discovered the importance of technology and in 2022, global information technology (IT) spending should reach $4.4 trillion, up 4% year-over-year (yoy). So, it is not surprising to see IT shares comprise a large part of the portfolio.
VOOG is a concentrated fund with over half the ETF comprising 10 stocks including Apple (NASDAQ:), Microsoft (NASDAQ:), Amazon (NASDAQ:), Alphabet (NASDAQ:), Tesla (NASDAQ:), and NVIDIA (NASDAQ:).
VOOG saw a record high in late December 2021 but is down about 25.8% year-to-date.
Trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 23.8x and 7.0x. Readers who expect large-cap technology stocks to fare better during this earnings season should put VOOG on their radar screen.
2. ProShares MSCI Transformational Changes ETF
- Current Price: $32.58
- 52-Week Range: $30.83 – $48.25
- Dividend yield: 0.16%
- Expense Ratio: 0.45% per year
With net assets close to $29.68 million, the ProShares MSCI Transformational Changes ETF (NYSE:) currently invests in firms that focus on four themes: the future of work, genomics & telehealth, digital consumer, and food revolution.
ANEW, which began trading in October 2020 has 176 holdings. It tracks the returns of the MSCI Global Transformational Changes Index. Over 80% of its holdings are US-based, followed by China (6.19%), Germany (3.78%), Ireland (2.04%) and Japan (1.33%).
Health care and IT sectors each account for 28% of assets followed by consumer discretionary (11.56%), materials (11.08%), communication services (10.66%), and consumer staples (5.21%).
At present, no stock has a weighting larger than 3.6% so price changes in a given stock are unlikely to affect the price of ANEW.
Its investment in the digital consumer sector is through stocks including online travel platform Booking Holdings (NASDAQ:); Chinese tech heavyweights Tencent Holdings (OTC:) and Alibaba (NYSE:); Amazon; and Meta Platforms (NASDAQ:).
Chemical and agritech name Corteva (NYSE:); spice and condiment giant McCormick (NYSE:); farm equipment manufacturer Deere (NYSE:); diverse food, beverage, nutrition, and scent group International Flavors & Fragrances (NYSE:) are among the top names in the food revolution sector.
For exposure to the future of work the ETF holds Apple, Microsoft, Alphabet, and software company Adobe (NASDAQ:).
Finally, its investments in genomics & telehealth include Abbott Laboratories (NYSE:), AbbVie (NYSE:), Roche Holding (SIX:), Danaher (NYSE:), and Johnson & Johnson (NYSE:).
Since January, ANEW is down over 27.6% of its value with a trailing P/E and P/B ratio of 39.92x and 5.02x respectively. We like the diversity of ANEW ETF and it might be worth investing at $32 or below.
