Bullish On Growth Stocks? Try This ETF
On a historical basis, the fourth quarter is a good time to be involved with consumer discretionary and technology names. Those are two meccas for growth stocks, but investors who don't like stock-picking or are just indecisive, there are plenty of ETFs to help with growth stock exposure.
Lots of options to be sure, but Standard & Poor's Capital IQ is particularly fond of one growth ETF: The Vanguard Growth ETF (NYSE: VUG). S&P rates VUG “overweight” with positive implications with favorable overweight inputs for its performance analytics and its cost factors, while its risk considerations are a more neutral marketweight in our methodology, according to a research note issued by the firm today.
VUG, which tracks the MSCI US Prime Market Growth Index, is home to almost 430 stocks and $20.7 billion in assets under management. Not to mention, the ETF has an expense ratio of just 0.12%. That makes it cheaper than 91% of comparable ETFs, according to Vanguard's Web site.
Consumer discretionary and tech names account for almost 48% of VUG's weight while consumer staples and industrials also get double-digit allocations. VUG's top-five holdings are Apple (Nasdaq: AAPL), IBM (NYSE: IBM), Google (Nasdaq: GOOG), Coca-Cola (NYSE: KO) and Oracle (Nasdaq: ORCL).
“Within performance analytics, we review the technical trends of an ETF and VUG earns a favorable overweight ranking for its bullish trading traits. Within risk considerations, we look at the standard deviation of the ETF, to assess the volatility of its three-year returns. In comparison to all ETFs in our universe, VUG also earns an overweight score, with a standard deviation of 20.7,” S&P analyst Todd Rosenbluth said in the note.
VUG is one 156 Vanguard ETF S&P rates as “overweight.”
“With investors typically gravitating toward growth-oriented securities in the fourth quarter, we think VUG offers appeal but with some diversification,” Rosenbluth added.
VUG currently trades about 6% below its 52-week high and would probably be in break-out move on a strong volume move above resistance at $64.
