In the realm of investing, growth ETFs have become the talk of the town, propelled by the meteoric rise of companies like Nvidia, whose stock has soared by an astonishing 90% year-to-date. This has led to a surge in the popularity of ETFs that invest heavily in these tech giants, driving up their returns significantly.
One such ETF is SMH, primarily focused on semiconductors, which has witnessed a remarkable year-to-date gain of nearly 35% and a one-year gain of almost 92%. While SMH presents an attractive semiconductor play, it suffers from a narrow concentration, holding only 26 companies and being heavily dependent on Nvidia’s performance.
For investors seeking broader exposure to growth stocks, a plethora of options are available, including popular choices like SCG, QQQ, M, and VUG. However, this video delves into five lesser-known but equally compelling growth ETFs that warrant your attention.
First on our list is XNTK, an intriguing ETF that stands out for its unique composition. Unlike many other technology ETFs that rely heavily on the so-called “Magnificent 7” (Apple, Microsoft, Amazon, Alphabet, Tesla, Nvidia, and Berkshire Hathaway), XNTK has a more balanced approach, with no single company holding sway. This diversification strategy has paid off, with XNTK consistently outperforming the S&P 500.
Next up is XLK, the Technology Select Sector SPDR Fund. XLK has set the tech sector ablaze, appreciating by a staggering 55% in the past year. This fund targets companies in the technology sector of the S&P 500 Index, providing exposure to both software and semiconductor giants. While XLK’s top holdings include tech behemoths like Microsoft and Apple, it also benefits from the inclusion of companies like Broadcom, Nvidia, and Adobe.
The following three ETFs take our excitement levels to new heights, with one even surpassing the impressive performance of SMH. First in this trio is IYW, the iShares US Technology ETF, which has delivered an astonishing return of over 133% year-to-date and over 62% in the past year. IYW boasts a portfolio dominated by software and service companies, with a healthy mix of semiconductors and tech hardware. This ETF’s top holdings include tech giants like Apple, Microsoft, Nvidia, and Google.
Next on this list of exceptional growth ETFs is IWY, the iShares Russell Top 200 Growth ETF. IWY offers a slightly different flavor by incorporating companies like Amazon, Tesla, and Eli Lilly into its top 10 holdings, providing exposure to companies with both growth and value characteristics. This ETF has a well-diversified portfolio, including companies from sectors like consumer discretionary, communication, health care, and financials.
Finally, we have SXQ, the Invesco PHLX Semiconductor ETF, the hottest semiconductor ETF you’ve probably never heard of. SXQ mirrors the composition of SSOX, but with a significantly lower expense ratio. This ETF provides pure-play exposure to the semiconductor industry, with top holdings like Nvidia, Advanced Micro Devices, Broadcom, and Qualcomm. SXQ’s impressive 10-year average appreciation of over 25% per year and 5-year average appreciation of over 30% make it a compelling choice for investors seeking semiconductor exposure.