10 Best ETFs To Buy for Long-Term Growth 

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If you’re a long-term investor looking to diversify your growth portfolio, there are a number of exchange-traded funds that can help you reach your goals. Exchange-traded funds, or ETFs, are like mutual funds in that they typically hold multiple securities, but they trade on an exchange like a stock. This makes them very easy to buy and sell, and they generally have low internal expenses as well.

With a single purchase, you can track any number of different sectors or market indices, from international small-cap dividend stocks to the entire U.S. stock market. While there are literally thousands of ETF options, here are 10 that do a great job of covering popular areas of the stock market.

Vanguard Total Stock Market ETF (VTI)

  • Price as of Dec. 23: $240.67

The Vanguard Total Stock Market ETF is one of the most popular and well-known growth ETFs available. The ETF tracks the CRSP U.S. Total Market index, owning over 4,000 stocks spanning large-, mid- and small-cap categories. Top holdings currently include such well-known names as Apple, Microsoft, Amazon, Alphabet and Facebook. With total fund assets of $1.3 trillion, the ETF is able to keep expenses extremely low, at just 0.03% of assets annually. Over the last 10 years, the ETF has delivered average returns of 15.97% annually.

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iShares Core S&P 500 ETF (IVV)

  • Price as of Dec. 23: $472.71

The iShares Core S&P 500 ETF is another popular market-tracking ETF, with net assets of $330 billion. Although this S&P 500 tracker is the littler brother to the SPDR S&P 500 ETF Trust and its $442.5 billion, the iShares version has a much lower expense ratio, at 0.03% vs. 0.0945%. The ETF attempts to replicate the return of the S&P 500 index, which is often used as a representation of the stock market as a whole. However, the S&P 500 is exclusively a large-cap index, meaning you’ll need to supplement this ETF with additional investments if you want broader exposure to the entire market.

Invesco QQQ Trust (QQQ)

  • Price as of Dec. 23: $396.92

The Invesco QQQ Trust tracks the Nasdaq-100 index, which includes 100 of the largest nonfinancial companies, both domestic and international, that trade on the Nasdaq composite. There is some overlap between these large-cap companies and those listed on the S&P 500 index, including Apple, Microsoft, Alphabet and Amazon. However, the Nasdaq-100 index and, by corollary, the QQQ ETF are more tech-oriented than the S&P 500 index, with about two-thirds of the fund devoted to information technology and communication services.

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With a 10-year return of 22.38% per year and 9.71% per year since inception, the QQQ Trust was rated the No. 1 best-performing large-cap growth fund over the past 15 years by Lipper, based on the total return through Dec. 31, 2020.

Vanguard Real Estate ETF (VNQ)

  • Price as of Dec. 23: $113.15

The Vanguard Real Estate ETF is not what one would call a “core” holding, but it can be a great diversifier for a portfolio dedicated entirely to growth stocks. Real estate is commonly viewed as a hedge against inflation, and real estate ETFs can also add some income to a growth portfolio. The Vanguard Real Estate ETF currently pays an unadjusted effective yield of 2.48% as of Nov. 30 and has returned 10.98% annually over the past 10 years. The ETF is designed to track the return of the MSCI US Investable Market Real Estate 25/50 Index and owns names such as American Tower, Public Storage and Prologis Inc.

Vanguard Extended Market ETF (VXF)

  • Price as of Dec. 23: $183.70

The Vanguard Extended Market ETF tracks a benchmark index of small- and mid-size companies. This index, the S&P Completion Index, is so named because it invests in all of the publicly traded stocks that aren’t a part of the S&P 500 index. The fund’s $109.6 billion in assets is spread among roughly 3,600 stocks, including such well-known smaller names as Square, Zoom, Uber and Snap. Over the past 10 years, the ETF has returned 14.9% per year, on average.

The Technology Select Sector SPDR Fund (XLK)

  • Price as of Dec. 22: $172.01

If you’re looking for a little more punch in your growth stock portfolio, take a look at the Technology Select Sector SPDR Fund. Unlike some of the other ETFs on this list, this ETF is dedicated to a specific sector of the market rather than tracking a broad market index. As a more narrowly focused ETF, this fund can be more volatile than the broader index funds, but it may also offer the potential for greater returns.

Over the past 10 years, the performance of the Technology Select Sector SPDR Fund has been nothing short of spectacular, posting an annualized return of 22.15% over 10 years. However, investors should note that the fund is top-heavy, with just two stocks, Apple and Microsoft, now comprising over 40% of the ETF’s entire portfolio.

iShares MSCI EAFE ETF (EFA)

  • Price as of Dec. 23: $78.44

For a little more diversification to your growth portfolio, consider an international ETF. The iShares MSCI EAFE ETF owns large- and mid-cap stocks from developed nations spanning Europe, Australia, Asia and the Far East. Since it can be hard for American investors to get enough information to make qualified judgments on individual foreign stocks, owning an ETF can be a great way to get some international exposure without having to make blind guesses about specific companies.

The MSCI EAFE ETF has returned an average of 7.97% per year for the last 10 years. It owns over 800 stocks, including many names that are familiar to Americans, from Nestle and Toyota to Sony and LVMH, which is the world’s largest luxury goods conglomerate and the parent company of Louis Vuitton, Givenchy, Dior and Tiffany.

iShares Core US Aggregate Bond ETF (AGG)

  • Price as of Dec. 23: $114.01

Over the last few years, stocks have soared and interest rates have remained at record lows. But pandemic-related inflation has proven to be less fleeting than expected, and the Federal Reserve could start to inch rates up to help keep it in check. That possibility makes bonds worth a closer look for diversifying your portfolio.

The iShares Core U.S. Aggregate Bond ETF tracks the Bloomberg US Aggregate Bond Index, which includes the total U.S. investment-grade bond market. The ETF has returned a respectable 2.95% over the last 10 years

Vanguard High Dividend Yield ETF (VYM)

  • Price as of Dec. 23: $110.45

The Vanguard High Dividend Yield ETF tracks the FTSE High Dividend Yield Index, which looks at the performance of stocks from companies that pay high dividend yields. Among its holdings are dividend aristocrats like Johnson & Johnson, Procter & Gamble and Exxon Mobile. Over the last 10 years, the EFT has produced annualized returns of 12.6%.

iShares Russell 2000 Growth ETF (IWO)

  • Price as of Dec. 23: $294.34

The iShares Russell 2000 Growth ETF tracks a select group of stocks in the Russell 2000 index, which includes the 2,000 smallest publicly traded companies in the Russell 3000 index. Fund managers screen Russell 2000 stocks for those most likely to grow at a faster rate than the overall market. As of Nov. 5, the ETF has 1,247 holdings. The diversity among small-cap holdings and the selection process can offset some of the risk of small-cap investing, as evidenced by IWO’s 33.11% gain over last year and average 15.80% annual gains over 10 years.

Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Dec. 26, 2021, unless otherwise noted, and subject to change.

About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.

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