12 Best Large-Cap Growth ETFs
In this article, we discuss 12 best large-cap growth ETFs. If you want to skip our discussion on growth investing, head over to 5 Best Large-Cap Growth ETFs.
Large-cap growth funds focus on investing in big companies, those in the top 70% in terms of market value. Growth funds constitute companies expected to grow their revenue or earnings faster than their peers or the overall market. They are often seen as risky but can be good for investors who are not risk averse and prefer long-term investments.
Tom Hancock, who heads focused equity at GMO, joined CNBC’s ETF Edge on November 15, 2023, and remarked that the growth trade momentum is aided by the leadership of mega-cap tech companies that are embracing artificial intelligence. Similarly, Nathan Geraci, president of The ETF Store, agreed with Hancock's observation but noted that only a couple of stocks are leading the growth outperformance. In his words, Geraci commented:
“A lot of growth performance this year has been driven by the so-called Magnificent Seven, because if you look at many of the growth indices, they’re pretty top-heavy. The largest growth companies have been enough to really drive that performance differential versus value.”
Currently, US small-cap stocks are experiencing their toughest period compared to larger companies in over two decades. This reflects the investor preference for mega-cap tech stocks while smaller players grapple with inflated interest rates. According to a Financial Times report, the Russell 2000 index has seen a 24% increase since the start of 2020, significantly trailing behind the S&P 500's impressive 60% surge during the same period. This deviation from historical norms, where smaller, fast-growing companies typically offer higher returns despite higher volatility, underscores the current market dynamics. Greg Tuorto, a small-cap portfolio manager at Goldman Sachs Asset Management, pointed out the lack of significant investment in the small-cap space since 2016 or 2017, highlighting the need for increased market enthusiasm, perhaps through M&A activity or a flourishing IPO market, to reignite small-cap growth. While there are indications of the equity market expanding beyond tech giants, persistent inflation and a strong job market have led traders to accept the likelihood of higher interest rates for longer than previously anticipated. In a scenario where the Federal Reserve maintains or even raises rates, smaller companies with significant short-term or floating-rate debt, like those in the Russell 2000, are likely to be most affected.
Further making a positive case for large-cap ETFs compared to their small-cap counterparts, an academic research paper took a close look at 66 large-cap and 34 small-cap ETFs listed in the United States from 2012 to 2016, covering the full trading history of these funds. The author chose to focus on the US market because it is a major player globally, and he wanted a robust sample size for the analysis. The study partially confirms what's known as the "size effect". Essentially, small-cap ETFs showed better returns compared to large-cap ETFs when looking at both raw and adjusted numbers. However, it is not all smooth sailing for small caps – they come with higher risk, which does not quite balance out the gains. Plus, this outperformance is not consistent year after year. When adjusted for risk, small-cap ETFs actually fall behind their larger counterparts. The same trend holds true when comparing the performance rankings of large-cap and small-cap ETFs.
Some of the best large-cap growth ETFs include Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG), Vanguard Growth Index Fund ETF Shares (NYSE:VUG), and Invesco QQQ Trust (NASDAQ:QQQ). These funds expose investors to growth stocks like Tesla, Inc. (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
Our Methodology
We curated our list of the best large-cap growth ETFs by choosing consensus picks from multiple credible websites. We have mentioned the 5-year share price performance of each ETF as of May 3, 2024, ranking the list in ascending order of the share price performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors.
A close-up image of a stock market graph displaying the growth of the company's mutual funds.
Best Large-Cap Growth ETFs
12. First Trust Large Cap Growth AlphaDEX Fund (NASDAQ:FTC)
5-Year Share Price Performance as of May 3: 69.29%
First Trust Large Cap Growth AlphaDEX Fund (NASDAQ:FTC) aims to mirror the performance of the Nasdaq AlphaDEX Large Cap Growth Index. It seeks to achieve similar investment outcomes in terms of both price and yield, excluding fees and expenses. First Trust Large Cap Growth AlphaDEX Fund (NASDAQ:FTC)’s net expense ratio stands at 0.60% as of December 1, 2023. As of May 2, 2024, the fund’s net assets exceed $1 billion, and its portfolio comprises 187 holdings, excluding cash. First Trust Large Cap Growth AlphaDEX Fund (NASDAQ:FTC) is one of the best large-cap growth ETFs to monitor.
Chipotle Mexican Grill, Inc. (NYSE:CMG) is one of the top holdings of First Trust Large Cap Growth AlphaDEX Fund (NASDAQ:FTC). According to Insider Monkey’s fourth quarter database, 56 hedge funds held stakes in Chipotle Mexican Grill, Inc. (NYSE:CMG), compared to 57 funds in the earlier quarter. Bill Ackman’s Pershing Square is the leading position holder in the company, with a stake worth $1.88 billion.
In addition to Tesla, Inc. (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Chipotle Mexican Grill, Inc. (NYSE:CMG) is a popular stock among elite hedge funds.
Artisan Mid Cap Fund stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its first quarter 2024 investor letter:
“Among our top Q1 contributors were Chipotle Mexican Grill, Inc. (NYSE:CMG), Shockwave Medical and Spotify. Chipotle’s combination of superior quality and speed of service has created a strong brand affinity, and the company is currently expanding its store count at a growth rate of 8%–10% annually. With each restaurant generating an annual income of around 60% of its original investment cost, the implied payback period is less than two years. Given these attractive economics, we believe a long runway remains for market penetration potential. Next, increased accessibility and convenience have been a strategic priority, leading it to add secondary “make lines” that enable each store to meet increased demand from third-party delivery services and the company’s own digital pickup lanes (“Chipotlanes”). And last, evidence is emerging that the company’s post-COVID training initiatives (“the four pillars of throughput”) are resulting in higher peak-time productivity. Overall, the profit cycle remains nicely in motion, and the stock remains a large CropSM holding.”
11. iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG)
5-Year Share Price Performance as of May 3: 81.23%
iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG) ranks 11th on our list of the best large-cap growth ETFs. iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG) aims to replicate the performance of S&P 900 Growth Index, which consists of large and mid-cap US stocks known for their growth potential. This ETF focuses on companies expected to experience earnings growth exceeding the market average. iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG)’s net assets amounted to $16.5 billion as of May 2, 2024. The fund features a portfolio comprising 473 holdings and an expense ratio of 0.04%.
Microsoft Corporation (NASDAQ:MSFT) occupies the largest position in iShares Core S&P U.S. Growth ETF (NASDAQ:IUSG)’s portfolio. According to Insider Monkey’s fourth quarter database, Microsoft Corporation (NASDAQ:MSFT) was found in 302 hedge fund portfolios, with Bill & Melinda Gates Foundation Trust holding the biggest stake in the company, comprising 38.2 million shares worth $14.3 billion.
Ithaka US Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its first quarter 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) builds best-in-class platforms and provides services that help drive small business productivity, large business competitiveness, and public-sector efficiency. Microsoft’s products include operating systems, cross-device productivity applications, server applications, software development tools, video games, and business-solution applications. The company also designs, manufactures, and sells devices, including PCs, tablets, and gaming/entertainment consoles that all integrate with Azure, its cloud computing service. In the quarter Microsoft’s stock appreciated based on excitement surrounding the company’s positioning in the generative AI market and its ability to monetize the coming wave of corporate investment in supercomputing and AI, which will be through both Azure and Microsoft Copilot, the company’s new GenAI personal assistant.”
10. iShares S&P 500 Growth ETF (NYSE:IVW)
5-Year Share Price Performance as of May 3: 82.91%
iShares S&P 500 Growth ETF (NYSE:IVW) is placed 10th on our list of the best large-cap growth ETFs. iShares S&P 500 Growth ETF (NYSE:IVW) seeks to replicate the performance of S&P 500(R) Growth Index, which is composed of large-cap US stocks known for their growth potential. The ETF was launched on May 22, 2000. Its net assets amounted to $42.8 billion as of May 2, 2024. iShares S&P 500 Growth ETF (NYSE:IVW)’s portfolio comprises 228 holdings, along with an expense ratio of 0.18%.
Apple Inc. (NASDAQ:AAPL) ranks 2nd in the portfolio of iShares S&P 500 Growth ETF (NYSE:IVW). Insider Monkey’s fourth quarter database reveals that Apple Inc. (NASDAQ:AAPL) was part of 131 hedge fund portfolios, compared to 134 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company, with 905.56 million shares worth $174.3 billion.
Ithaka US Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) is a global consumer electronics and software company that designs and markets mobile communications devices (iPhones), personal computers (Macs), multi-purpose tablets (iPads), and wearables (Apple Watch, AirPods, and Accessories). The company also sells several high-margin consumer services including Advertising, AppleCare, Cloud Services, Digital Content and Payment Services. The stock’s underperformance during the quarter was due to fears that the company’s slowing top-line growth and increased competitive threats make the stock’s premium valuation harder to justify.”
9. Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG)
5-Year Share Price Performance as of May 3: 83.73%
Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG) is one of the best large-cap growth ETFs to buy. Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG) invests in stocks from the Standard & Poor’s 500 Growth Index. Its primary objective is to closely mirror the returns of this index, which is considered a benchmark for overall US growth stock performance. The ETF was established on September 7, 2010. Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG) features an expense ratio of 0.10% and its portfolio comprises 228 stocks. As of March 31, 2024, VOOG’s net assets came in at $10.3 billion.
Semiconductor giant NVIDIA Corporation (NASDAQ:NVDA) is one of the top holdings of Vanguard S&P 500 Growth Index Fund ETF Shares (NYSE:VOOG). As per Insider Monkey’s Q4 data, NVIDIA Corporation (NASDAQ:NVDA) was found in 173 hedge fund portfolios, compared to 180 in the earlier quarter. Rajiv Jain’s GQG Partners is one of the largest stakeholders of NVIDIA, with 13.90 million shares worth $6.88 billion.
Patient Capital Opportunity Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“This quarter we entered two new positions, while exiting four positions. Our first new position was NVIDIA Corporation (NASDAQ:NVDA), which we bought early in the quarter. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and FCF an astounding 126%, 392%, and 610%, respectively, over the last year. While much of the focus is on Nvidia’s market cap reaching $2.3T, up 230% over the last year, the company’s valuation has actually come down over that period. As of 3/31/23, consensus was valuing the company at 61x forward EPS. This compares to today, where the company is being valued at 37x. While yes, we have never seen a company expand their market cap by so much so quickly, we have also never seen a company grow their fundamental earnings and cash generation so quickly (and which is actually expanding faster than valuation). While competitors are working to enter the GPU space, Nvidia has created a moat around their GPUs with their CUDA software offering. While we do expect the large cloud players to continue to move into the market, we think NVDA can continue to demand top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of accelerated computing and artificial intelligence (AI).
Nvidia Corp. (NVDA) was a top performer in the quarter gaining 82.5% in the period. While the company has had an impressive run, gaining 242% over the last year, the valuation has been supported by the impressive growth in Revenue (126%), EPS (392%) and free cash flow (610%) over the last year. The company has solidified its position in the GPU space supported by its proprietary software CUDA. While we expect competition to increase, we think NVDA can continue to maintain top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
8. iShares Morningstar Growth ETF (NYSE:ILCG)
5-Year Share Price Performance as of May 3: 92.31%
iShares Morningstar Growth ETF (NYSE:ILCG) seeks to replicate the performance of the Morningstar US Large-Mid Cap Broad Growth Index, consisting of US equities with growth traits from both large and mid-cap categories. It is one of the best large-cap growth ETFs to buy. As of May 2, 2024, iShares Morningstar Growth ETF (NYSE:ILCG)’s net assets came exceeded $2 billion. The fund features an expense ratio of 0.04% and a portfolio comprising 392 holdings.
Amazon.com, Inc. (NASDAQ:AMZN) ranks 4th in iShares Morningstar Growth ETF (NYSE:ILCG)’s portfolio. Insider Monkey’s Q4 database found that Amazon.com, Inc. (NASDAQ:AMZN) stock was held by 293 smart hedge funds, up from 286 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 41.78 million shares worth $6.34 billion.
Ithaka US Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:
“Founded in 1994, Amazon.com, Inc. (NASDAQ:AMZN) has evolved from its early roots as an online bookstore to become one of the world’s largest eCommerce retailers. At the end of 2022 Amazon stood poised to capture ~40% of all US e-commerce sales, representing five times more share than the next closest competitor. In addition to eCommerce, Amazon Web Services (“AWS”) has become the market leader in outsourced cloud infrastructure. Further, Amazon Advertising is garnering a significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon’s site. Amazon’s stock appreciated on the back of stabilization of the company’s cloud computing segment and increased confidence the company would be able to contain expenses and push operating margins above prior peaks in the near-to-medium term.”
7. Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ)
5-Year Share Price Performance as of May 3: 94.88%
Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ) strives to mirror the price and yield performance of the Nasdaq Composite Index, which is a weighted index reflecting the market capitalization of stocks listed on the NASDAQ stock exchange. It is one of the best large-cap growth ETFs, ranking 7th on our list. Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ) was launched on September 9, 2003. As of March 31, 2024, the fund holds $6.08 billion in portfolio assets, while featuring a portfolio comprising 1,006 holdings and an expense ratio of 0.21%.
Meta Platforms, Inc. (NASDAQ:META) is one of the top holdings of Fidelity Nasdaq Composite Index ETF (NASDAQ:ONEQ). Hedge fund ownership in Meta Platforms, Inc. (NASDAQ:META) increased to 242 funds at the end of December 2023, compared to 234 in the previous quarter. Chase Coleman’s Tiger Global Management is one of the key stakeholders of the company, with 7.46 million shares worth $2.6 billion.
Patient Capital Opportunity Equity Strategy stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a top contributor in the first quarter gaining another 37.5%. Performance has been supported by strong top and bottom-line growth as the company maintains its leadership in the advertising space, despite Reels still being under monetized versus Newsfeed and Stories. The company continues to return cash to shareholders, increasing their buyback program by another $50B in February (6.4% of shares outstanding), and announcing their first dividend of $0.50 per share (0.39% yield). The company trades at 25x this year’s earnings, which we do not view as too demanding for a company with some of the best AI assets, an improving topline that should lead to free cash flow outperformance and continued capital return.”
6. Nuveen ESG Large-Cap Growth ETF (BATS:NULG)
5-Year Share Price Performance as of May 3: 100.46%
Nuveen ESG Large-Cap Growth ETF (BATS:NULG) ranks 6th on our list of the best large-cap growth ETFs. Nuveen ESG Large-Cap Growth ETF (BATS:NULG) follows a passive management strategy, investing primarily in large-cap US equity securities displaying growth characteristics and meeting required environmental, social, and governance (ESG) standards. It aims to replicate the investment outcomes of the TIAA ESG USA Large-Cap Growth Index, excluding fees and expenses. The fund was launched on December 16, 2016. Nuveen ESG Large-Cap Growth ETF (BATS:NULG) features an expense ratio of 0.26% and holds $1.3 billion in net assets as of May 2, 2024.
Alphabet Inc. (NASDAQ:GOOG) is one of the largest holdings of Nuveen ESG Large-Cap Growth ETF (BATS:NULG). Alphabet Inc. (NASDAQ:GOOG) was part of 166 hedge fund portfolios at the conclusion of December 2023, up from 163 in the preceding quarter. Harris Associates is a prominent stakeholder of Alphabet, with a position worth $2.9 billion.
In addition to Tesla, Inc. (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) is one of the top growth plays on the radar of smart investors.
Palm Valley Capital Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its first quarter 2024 investor letter:
“Governments have various irons in the fire for curbing (commandeering?) the power of tech titans, with the European Union rolling out the Digital Markets Act, the Federal Trade Commission suing Amazon for illegally using monopoly power, and the DOJ lawsuit against Alphabet Inc. (NASDAQ:GOOG)’s advertising business going to trial in September.
Furthermore, the dominant technology enterprises are not immune from shooting themselves in the foot. Google’s botched launch of its AI model, Gemini, shows the risk of having too much money. You lose discipline. A Pirate Wires exposé into the firm’s culture revealed that employees went to extreme lengths to intentionally degrade the quality of the AI engine’s output for ideological reasons. Try that as a small business! See how far you make it…” (Click here to read the full text)
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Disclosure: None. 12 Best Large-Cap Growth ETFs is originally published on Insider Monkey.