3 Great Large Cap Growth ETFs To Pick Up On A Dip (2024)

Introduction

Growth and technology stocks have continued to outperform this year. The tech giants like Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) continue to do well despite a global pandemic. Perhaps technology stocks are more adept to fast-changing environments. It also appears that technology companies can be more robust in difficult economic environments, as the value they provide customers remains high. If you're looking for exposure to these large-cap growth and technology companies, but want to do it in a more cost-efficient or simple manner than individually picking out your favorite stocks, then the following three exchange-traded funds may be strong choices for any portfolio, especially on a pullback from current prices near all-time highs.

VUG: Vanguard Growth ETF

Let's start with what is probably the least aggressive and most basic option I will write about today. The Vanguard Growth ETF (VUG) boasts an expense ratio of just 0.04% and has consistently beat the S&P 500 over the last decade by a very substantial margin.

Data by YCharts

The ETF is passively managed and aims to track the CRSP US Large Cap Growth index. This index (and thus VUG) selects US large-cap growth stocks based on the following six factors:

• Expected long-term EPS growth
• Expected short-term EPS growth
• 3-year historical EPS growth
• 3-year historical sales growth
• Return on assets ratio
• Current investment-to-assets ratio

VUG currently holds the large-cap growth companies one would probably expect. All the big technology names make up the top few holdings, while more classic companies like Home Depot (HD) and Visa (V) make the top 10. Other notable holdings that don't quite make up the top 10 holdings include Costco (COST), McDonald's (MCD), Comcast (CMCSA), Adobe (ADBE), and others.

Source: ETF.com VUG Overview

Overall, VUG is a well-rounded, low-expense growth ETF. This ETF will give investors exposure to the largest and most dominant growth companies that have consistently outperformed the market for decades, although investors are unlikely to gain exposure to the biggest winners that go from small caps to large caps in an ETF like this. If you're just looking for a basic growth ETF without paying large fees, then I think VUG is an excellent consideration.

IXN: iShares Global Tech ETF

I believe the iShares Global Tech ETF (IXN) is another solid growth option for many investors to pick up on a dip from current levels, as this ETF provides more international/global exposure. Something that North American-based investors tend to ignore (or at-least they do in my experience). This ETF tracks the S&P Global 1200 Information Technology Sector and has even provided investors with some outperformance over the tracked index. Once again, this growth ETF has smashed the S&P 500's returns in the past. This doesn't mean it will continue to do so going forward, but technology isn't going anywhere soon and large opportunities for growth remain. Investors should be aware of the fund's 0.46% expense ratio.

Data by YCharts

The U.S. still makes up a majority of IXN's holdings although investors will gain reasonable exposure to Japan, South Korea, and Taiwan, as well as a few European and Canadian names.

Source: iShares

Microsoft and Apple once again top the list of this ETF's top holdings. Notably, however, are the international holdings absent from many US only growth ETFs. Samsung (OTCPK:SSNLF) makes up 2.49% of the ETF, while Taiwan Semiconductor Manufacturing (TSM) comes in 10th place with 2.3% of the fund.

Source: iShares

Some of the other international holdings worth pointing out include Japanese names like Keyence (OTCPK:KYCCF), Murata (OTCPK:MRAAF), and Tokyo Electron (OTCPK:TOELY), while ASML Holding (ASML) and SAP (SAP) are notable European stocks.

Source: iShares

IXN provides investors with some international exposure in developed markets like Japan and Europe, as well as some companies from emerging markets like Taiwan. This makes this ETF unique to other growth ETFs that investors often consider building a position in.

SKYY: First Trust Cloud Computing ETF

It wasn't too long ago that I wrote an article titled SKYY: Growth To Continue For Years on the First Trust Cloud Computing ETF (SKYY). This ETF invests in cloud computing companies and is the most aggressive ETF I will mention in this article. SKYY has an expense ratio of 0.60% and tracks the ISE CTA Cloud Computing Index.

The ETF was rocked, much like everything else, in February and March but has since recovered fully and even moved higher. As of the time of writing, SKYY sits up 20% year-to-date.

Data by YCharts

Cloud computing is projected to grow to over $350 billion by 2022, up substantially from a projected $266 billion in 2020. The COVID-19 pandemic even may accelerate this growth as people connect through the internet and cloud-based technology.

Source: Gartner (November 2019 Public Cloud Revenue Forecast)

While there are other cloud-focused ETFs like CLOU and WCLD, SKYY tends to own some of the larger cap names like Microsoft, Amazon, Alphabet (GOOG), and Alibaba (BABA) more heavily. These are the leading companies in the cloud space that have more than ample resources to defend their strong market positions and continue to take advantage of growth opportunities, making myself personally a fan of SKYY over some other options.

Source: Seeking Alpha

Conclusion

Technology is here to stay. Growth in various spaces across technology provides investors with opportunities over the coming years, yet it can be time-consuming and costly to be constantly re-adjusting individual stocks in one's portfolio. Thus VUG, IXN, and SKYY are all superb large-cap growth ETFs with varying degrees of aggressiveness, international exposure, and risk that investors may do very well with picking up on a dip from current prices.

I'll be writing more articles on great (or sometimes not so great) stocks. If you enjoyed this article and wish to receive updates on my latest research, click "Follow" next to my name at the top of this article.

Lukas Wolgram