Market Overview

Growth ETFs For All Seasons?


Finding an ETF that is chock full of growth stocks isn't a trying task. The big ETF sponsors such as iShares and Vanguard even offer multiple growth funds with some of the more widely known being the Vanguard Growth ETF (NYSE: VUG) and the iShares Morningstar Large Growth Index Fund (NYSE: JKE).

With consumer discretionary and technology fare leading the early 2012 market rally, the time could be right to consider other options in the growth ETF universe and the folks at S&P Capital IQ offer up three ideas.

The iShares Russell 1000 Growth Index Fund (NYSE: IWF), iShares S&P 500 Growth Index Fund (NYSE: IVW) and WisdomTree LargeCap Growth Fund (NYSE: ROI) are all trading near 52-week highs and all three are rated Overweight by S&P Capital IQ.

The iShares S&P 500 Growth Index Fund, which is home to $6.7 billion in AUM and a cheap expense ratio of 0.18%, devotes over 26% of its weight to technology stocks with Apple (Nasdaq: AAPL) leading the charge at 6.5% of the ETF's weight. Other tech titans found among IVW's top-10 holdings include IBM (NYSE: IBM), Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT) and Oracle (Nasdaq: ORCL).

The iShares Russell 1000 Growth Index Fund would appear to have some similarities with IVW, as S&P Capital IQ notes, but with $15.5 billion in AUM and an expense ratio of 0.2%, IWF is bigger and slightly more expensive. The similarities include technology being the top sector allocation and the aforementioned five tech stocks are also top-10 holdings in IWF though with different weights. IWF has topped IVW in terms of year-to-date performance.

The WisdomTree LargeCap Growth Fund is the smallest of the three ETFs with almost $19.7 million in AUM and the priciest with an expense ratio of 0.38%. Home to nearly 300 stocks, Apple Oracle, Texas Instruments (NYSE: TXN) are the only tech names found among ROI's top-10 holdings. In fact, at almost 31%, energy is the ETF's top sector weight. Tech is next at almost 25%. Other top holdings include Exxon Mobil (NYSE: XOM) and Union Pacific (NYSE: UNP). Year-to-date, ROI has outperformed IVW but has slightly lagged IWF.

"In contrast to 2011, the U.S. equity market in 2012 has been led by the cyclical sectors, as investors appear more prepared to take on risk in light of improving macroeconomic trends domestically and in Europe. S&P Capital IQ believes that many of these strong performing sectors will continue to do well and recommends relatively high exposure to Consumer Discretionary, Information Technology and Industrials," S&P analyst Todd Rosenbluth said in a note.


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Posted-In: Analyst Color Long Ideas News Broad U.S. Equity ETFs Short Ideas Specialty ETFs Intraday Update Markets

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